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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    Transaction report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission file number: 000-49883
 
 PLUMAS BANCORP
  California
    
    75-2987096(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)35 S. Lindan Avenue, Quincy, CA
    
    95971(Address of principal executive offices)
    
    (Zip Code)
 (530) 283-7305
 
  Title of Each Class:
    
    Name of Each Exchange on which Registered:Common Stock, no par value
    
    The NASDAQ Stock Market LLC
 None.
 
  o þ
  o þ
  þ o
 o o
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
  o þ




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    22Item 1B. Unresolved Staff Comments
    
    
    22Item 2. Properties
    
    
    22Item 3. Legal Proceedings
    
    
    23Item 4. (Removed and Reserved)
    
    
    23PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    26Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    27Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 8. Financial Statements and Supplementary Data
    
    
    52Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    53Item 9A. Controls and Procedures
    
    
    53Item 9B. Other Information
    
    
    54PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    54Item 11. Executive Compensation
    
    
    54Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    54Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    55Item 14. Principal Accountant Fees and Services
    
    
    55PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    55Signatures
    
    
    59EX-3.2EX-23EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1EX-99.2
   2




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PART I
 Forward-Looking Information
 This Annual Report on Form 10-K includes forward-looking statements and information is subject to
the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements (which involve Plumas Bancorps
(the Companys) plans, beliefs and goals, refer to estimates or use similar terms) involve
certain risks and uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. Such risks and uncertainties include, but are not limited to, the
following factors:
 
    
    Competitive pressure in the banking industry, competition in the markets the Company
operates in and changes in the legal, accounting and regulatory environment
 
    
    Changes in the interest rate environment and volatility of rate sensitive assets and
liabilities
 
    
    Declines in the health of the economy, nationally or regionally, which could reduce the
demand for loans, reduce the ability of borrowers to repay loans and/or reduce the value
of real estate collateral securing most of the Companys loans
 
    
    Credit quality deterioration, which could cause an increase in the provision for loan
and lease losses
    
    Devaluation of fixed income securities
    
    Asset/liability matching risks and liquidity risks
    
    Loss of key personnel
    
    Operational interruptions including data processing systems failure and fraud
 The Company undertakes no obligation to revise or publicly release the results of any revision to
these forward-looking statements.
  3




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ITEM 1.
    
    BUSINESS
 General
 The Company Bank Holding Company Act
   www.plumasbank.com www.sec.gov
 The Bank.
   4




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Commitment to our Communities.
  Capital Purchase Program  TARP  Preferred Stock and Stock Warrant.
   6




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Trust Preferred Securities.
      7




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Recent Developments.
    Business Concentrations.
 Competition
   8




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Employees.
 Code of Ethics
  Supervision and Regulation
 The Company.
   9




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The Bank.
  Capital Standards.
   10




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Requirement for theBank to be:Adequately
    
    
    Well
    
    
    Plumas
    
    
    PlumasCapitalized
    
    
    Capitalized
    
    
    Bank
    
    
    BancorpTier 1 leverage capital ratio
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    8.9
    %
    
    
    8.9
    %Tier 1 risk-based capital ratio
    
    
    4.0
    %
    
    
    6.0
    %
    
    
    12.8
    %
    
    
    12.7
    %Total risk-based capital ratio
    
    
    8.0
    %
    
    
    10.0
    %
    
    
    14.0
    %
    
    
    13.9
    %
  Prompt Corrective Action.
   11




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Premiums for Deposit Insurance.
 
    
    raised the minimum designated reserve ratio (DDR) which the FDIC must set each year, to
1.35 percent (from the former minimum of 1.15 percent) and removed the upper limit on the DRR
(which was formerly capped at 1.5 percent) and therefore on the size of the fund;
 
    
    required that the fund reserve ratio reach 1.35 percent by September 30, 2020 (rather than
1.15 percent by the end of 2016, as formerly required);
 
    
    required that, in setting assessments, the FDIC offset the effect of requiring that the
reserve ratio reach 1.35 percent by September 30, 2020 rather than 1.15 percent by the end of
2016 on insured depository institutions with total consolidated assets of less than
$10,000,000,000;
 
    
    eliminated the requirement that the FDIC provide dividends from the fund when the reserve
ratio is between 1.35 percent and 1.5 percent; and
 
    
    continued the FDICs authority to declare dividends when the reserve ratio at the end of a
calendar year is at least 1.5 percent, but granted the FDIC sole discretion in determining
whether to suspend or limit the declaration or payment of dividends.
  
    
    estimated operating expenses of the Deposit Insurance Fund;
 
    
    case resolution expenditures and income of the Deposit Insurance Fund;
 
    
    the projected effects of assessments on the capital and earnings of the institutions paying
assessments to the Deposit Insurance Fund;
 
    
    the risk factors and other factors taken into account pursuant to 12 USC 1817(b)(1); and
 
    
    any other factors the Board may deem appropriate.
     12




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Federal Home Loan Bank System.
 
    
    a membership stock requirement with an initial cap of $25 million (100% of
membership asset value as defined), or
 
    
    an activity based stock requirement (based on percentage of outstanding
advances).
   Federal Reserve System.
 Impact of Monetary Policies.
 Extensions of Credit to Insiders and Transactions with Affiliates. Federal Reserve Act Regulation O
 
    
    a banks or bank holding companys executive officers, directors and
principal shareholders (i.e., in most cases, those persons who own, control or have power
to vote more than 10% of any class of voting securities),
 
    
    any company controlled by any such executive officer, director or
shareholder, or
 
    
    any political or campaign committee controlled by such executive officer,
director or principal shareholder.
   13




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Consumer Protection Laws and Regulations.
 Community Reinvestment Act .
 Equal Credit Opportunity Act
 Truth in Lending Act
 Fair Housing Act
 Home Mortgage Disclosure Act
 Right to Financial Privacy Act
 Real Estate Settlement Procedures Act
   14




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Recent Legislation and Other Changes.
        15




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
    
    A new Capital Assistance Program to help ensure that our banking institutions have
sufficient capital to withstand the challenges ahead, paired with a supervisory process to
produce a more consistent and forward-looking assessment of the risks on banks balance
sheets and their potential capital needs.
 
    
    A new Public-Private Investment Fund on an initial scale of up to $500 billion, with
the potential to expand up to $1 trillion, to catalyze the removal of legacy assets from
the balance sheets of financial institutions. This fund will combine public and private
capital with government financing to help free up capital to support new lending.
 
    
    A new Treasury and Federal Reserve initiative to dramatically expand  up to $1
trillion  the existing Term Asset-Backed Securities Lending Facility (TALF) in order to
reduce credit spreads and restart the securitized credit markets that in recent years
supported a substantial portion of lending to households, students, small businesses, and
others.
 
    
    An extension of the FDICs Temporary Liquidity Guarantee Program to October 31, 2009. A
new framework of governance and oversight to help ensure that banks receiving funds are
held responsible for appropriate use of those funds through stronger conditions on
lending, dividends and executive compensation along with enhanced reporting to the public.
  
    
    accelerated from 2011 to 2008 the date that the Federal Reserve Bank could pay interest
on deposits of banks held with the Federal Reserve to meet reserve requirements;
 
    
    to the extent that the U. S. Treasury purchases mortgage securities as part of TARP,
the Treasury shall implement a plan to minimize foreclosures including using guarantees
and credit enhancements to support reasonable loan modifications, and to the extent loans
are owned by the government to consent to the reasonable modification of such loans;
 
    
    limits executive compensation for executives for TARP participating financial
institutions including a maximum corporate tax deduction limit of $500,000 for each of the
top five highest paid executives of such institution, requiring clawbacks of incentive
compensation that were paid based on inaccurate or false information, limiting golden
parachutes for involuntary and certain voluntary terminations to 2.99x their average
annual salary and bonus for the last five years, and prohibiting the payment of incentive
compensation that encourages management to take unnecessary and excessive risks with
respect to the institution;
 
    
    extends the mortgage debt forgiveness provision of the Mortgage Forgiveness Debt Relief
Act of 2007 by three years (2012) to ease the income tax burden on those involved with
certain foreclosures; and
 
    
    qualified financial institutions may count losses on FNMA and FHLMC preferred stock
against ordinary income, rather than capital gain income.
   18




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
    
    Authorized a bank or trust acting in any capacity under a court or private trust to
arrange for the deposit of securities in a securities depository or federal reserve bank,
and provided how they may be held by the securities depository;
 
    
    Reduced from 5% to 1% the amount of eligible assets to be maintained at an approved
depository by an office of a foreign (other nation) bank for the protection of the
interests of creditors of the banks business in this state or for the protection of the
public interest;
 
    
    Enabled the DFI to issue an order against a bank licensee parent or subsidiary;
 
    
    Provided that the examinations may be conducted in alternate examination periods if the
DFI concludes that an examination of the state bank by the appropriate federal regulator
carries out the purpose of this section, but the DFI may not accept two consecutive
examination reports made by federal regulators;
 
    
    Provided that the DFI may examine subsidiaries of every California state bank, state
trust company, and foreign (other nation) bank to the extent and whenever and as often as
the DFI shall deem advisable;
    
    Enabled the DFI issue an order or a final order to now include any bank holding company
or subsidiary of the bank, trust company, or foreign banking corporation that is violating
or failing to comply with any applicable law, or is conducting activities in an unsafe or
injurious manner;
 
    
    Enabled the DFI to take action against a person who has engaged in or participated in
any unsafe or unsound act with regard to a bank, including a former employee who has left
the bank.
  21




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Recent Accounting Pronouncements
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  Owned Properties
 
 35 South Lindan Avenue 
Quincy, California (1)
    
    32 Central Avenue
Quincy, California (1)
    
    80 W. Main St. 

Quincy, California (3)424 N. Mill Creek 

Quincy, California (1)
    
    336 West Main Street
Quincy, California
    
    120 North Pine Street
Portola, California43163 Highway 299E 
Fall River Mills, California
    
    121 Crescent Street
Greenville, California
    
    255 Main Street
Chester, California510 North Main Street 
Alturas, California
    
    3000 Riverside Drive
Susanville, California
    
    8475 North Lake Boulevard
Kings Beach, California11638 Donner Pass Road 
Truckee, California
    
    2175 Civic Center Drive
Redding, California
 Leased Properties
 
 243 North Lake Boulevard
    
    1005 Terminal Way, Ste. 246
    
    470 Nevada St., Suite 108Tahoe City, California
    
    Reno, Nevada (1)
    
    Auburn, California (2)
 (1)
    
    Non-branch administrative or credit administrative offices.(2)
    
    Commercial lending office.(3)
    
    Leased to a third party.   22




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Year EndingDecember 31,2011
    
    $
    133,0002012
    
    
    128,0002013
    
    
    60,0002014
    
    
    37,0002015
    
    
    9,000$
    367,000
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    (REMOVED AND RESERVED)
  23




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCK-
HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
  CommonQuarter
    
    Dividends
    
    
    High
    
    
    Low4th Quarter 2010
    
    
    
    
    
    $
    3.09
    
    
    $
    1.923rd Quarter 2010
    
    
    
    
    
    $
    3.22
    
    
    $
    2.532nd Quarter 2010
    
    
    
    
    
    $
    3.39
    
    
    $
    2.461st Quarter 2010
    
    
    
    
    
    $
    3.78
    
    
    $
    2.214th Quarter 2009
    
    
    
    
    
    $
    4.80
    
    
    $
    2.883rd Quarter 2009
    
    
    
    
    
    $
    4.99
    
    
    $
    3.802nd Quarter 2009
    
    
    
    
    
    $
    5.96
    
    
    $
    3.801st Quarter 2009
    
    
    
    
    
    $
    7.81
    
    
    $
    3.80
      24




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Securities Authorized for Issuance under Equity Compensation Plans.
 Number of securities remainingavailable for future issuanceNumber of securities to
    
    
    Weighted-average
    
    
    under equity compensationbe issued upon exercise
    
    
    exercise price of
    
    
    plans (excluding securitiesof outstanding options
    
    
    outstanding options
    
    
    reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    312,030
    
    
    $
    13.41
    
    
    
    561,155Equity compensation
plans not approved
by security holders
    
    
    None
    
    
    Not Applicable
    
    
    
    NoneTotal
    
    
    312,030
    
    
    $
    13.41
    
    
    
    561,155
  Issuer Purchases of Equity Securities.
  25




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ITEM 6.
    
    SELECTED FINANCIAL DATA
  At or for the year ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands except per share information)Statement of OperationsInterest income
    
    $
    20,680
    
    
    $
    22,836
    
    
    $
    25,440
    
    
    $
    30,284
    
    
    $
    29,483Interest expense
    
    
    3,147
    
    
    
    3,655
    
    
    
    5,364
    
    
    
    8,536
    
    
    
    6,954Net interest income
    
    
    17,533
    
    
    
    19,181
    
    
    
    20,076
    
    
    
    21,748
    
    
    
    22,529Provision for loan losses
    
    
    5,500
    
    
    
    14,500
    
    
    
    4,600
    
    
    
    800
    
    
    
    1,000Noninterest income
    
    
    8,561
    
    
    
    5,752
    
    
    
    5,091
    
    
    
    5,448
    
    
    
    5,159Noninterest expense
    
    
    19,234
    
    
    
    26,354
    
    
    
    20,475
    
    
    
    19,671
    
    
    
    18,290Provision for (benefit from) income taxes
    
    
    389
    
    
    
    (6,775
    )
    
    
    (212
    )
    
    
    2,502
    
    
    
    3,196Net income (loss)
    
    $
    971
    
    
    $
    (9,146
    )
    
    $
    304
    
    
    $
    4,223
    
    
    $
    5,202Balance sheet (end of period)Total assets
    
    $
    484,480
    
    
    $
    528,117
    
    
    $
    457,175
    
    
    $
    453,115
    
    
    $
    473,239Total loans
    
    $
    314,200
    
    
    $
    332,678
    
    
    $
    366,017
    
    
    $
    352,949
    
    
    $
    354,712Allowance for loan losses
    
    $
    7,324
    
    
    $
    9,568
    
    
    $
    7,224
    
    
    $
    4,211
    
    
    $
    3,917Total deposits
    
    $
    424,887
    
    
    $
    433,255
    
    
    $
    371,493
    
    
    $
    391,940
    
    
    $
    402,176Total shareholders equity
    
    $
    37,988
    
    
    $
    38,231
    
    
    $
    35,437
    
    
    $
    37,139
    
    
    $
    35,852Balance sheet (period average)Total assets
    
    $
    500,082
    
    
    $
    490,000
    
    
    $
    447,720
    
    
    $
    464,974
    
    
    $
    468,988Total loans
    
    $
    323,906
    
    
    $
    354,482
    
    
    $
    355,416
    
    
    $
    353,384
    
    
    $
    335,226Total deposits
    
    $
    430,777
    
    
    $
    403,896
    
    
    $
    382,279
    
    
    $
    403,772
    
    
    $
    415,700Total shareholders equity
    
    $
    38,941
    
    
    $
    43,839
    
    
    $
    37,343
    
    
    $
    37,041
    
    
    $
    33,682Capital ratiosLeverage ratio
    
    
    8.9
    %
    
    
    7.9
    %
    
    
    9.8
    %
    
    
    10.0
    %
    
    
    9.5
    %Tier 1 risk-based capital
    
    
    12.7
    %
    
    
    10.4
    %
    
    
    11.0
    %
    
    
    11.6
    %
    
    
    10.9
    %Total risk-based capital
    
    
    13.9
    %
    
    
    11.6
    %
    
    
    12.2
    %
    
    
    12.7
    %
    
    
    11.8
    %Asset quality ratiosNonperforming loans/total loans
    
    
    8.07
    %
    
    
    4.30
    %
    
    
    7.31
    %
    
    
    0.75
    %
    
    
    0.29
    %Nonperforming assets/total assets
    
    
    7.07
    %
    
    
    4.84
    %
    
    
    6.78
    %
    
    
    0.70
    %
    
    
    0.22
    %Allowance for loan losses/total loans
    
    
    2.33
    %
    
    
    2.88
    %
    
    
    1.97
    %
    
    
    1.19
    %
    
    
    1.10
    %Net loan charge-offs
    
    $
    7,744
    
    
    $
    12,156
    
    
    $
    1,587
    
    
    $
    506
    
    
    $
    339Performance ratiosReturn (loss) on average assets
    
    
    0.19
    %
    
    
    (1.87
    )%
    
    
    0.07
    %
    
    
    0.91
    %
    
    
    1.11
    %Return (loss) on average common equity
    
    
    1.1
    %
    
    
    (29.5
    )%
    
    
    0.8
    %
    
    
    11.4
    %
    
    
    15.4
    %Return (loss) on average equity
    
    
    2.5
    %
    
    
    (20.9
    )%
    
    
    0.8
    %
    
    
    11.4
    %
    
    
    15.4
    %Net interest margin
    
    
    4.24
    %
    
    
    4.52
    %
    
    
    4.99
    %
    
    
    5.18
    %
    
    
    5.32
    %Loans to deposits
    
    
    73.9
    %
    
    
    76.8
    %
    
    
    98.5
    %
    
    
    90.1
    %
    
    
    88.2
    %Efficiency ratio
    
    
    73.7
    %
    
    
    105.7
    %
    
    
    81.4
    %
    
    
    72.3
    %
    
    
    66.1
    %Per share informationBasic earnings (loss)
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06
    
    
    $
    0.85
    
    
    $
    1.04Diluted earnings (loss)
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06
    
    
    $
    0.84
    
    
    $
    1.02Common cash dividends
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.24
    
    
    $
    0.30
    
    
    $
    0.26Dividend payout ratio
    
    
    
    %
    
    
    
    %
    
    
    400
    %
    
    
    35.3
    %
    
    
    25.0
    %Book value per common share
    
    $
    5.51
    
    
    $
    5.58
    
    
    $
    7.42
    
    
    $
    7.63
    
    
    $
    7.14Common shares outstanding at period end
    
    
    4,776,339
    
    
    
    4,776,339
    
    
    
    4,775,339
    
    
    
    4,869,130
    
    
    
    5,023,205
  26




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 General
   Critical Accounting Policies
  Allowance for Loan Losses.
   Other Real Estate Owned.
  27




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##### Table of Contents



Income Taxes.
   Stock-Based Compensation
  Overview
   28




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Results of Operations
 Net Interest Income
  Year      ended December 31,2010
    
    
    2009
    
    
    2008Interest
    
    
    Rates
    
    
    
    
    
    
    Interest
    
    
    Rates
    
    
    
    
    
    
    Interest
    
    
    RatesAverage
    
    
    income/
    
    
    earned
    
    
    Average
    
    
    income/
    
    
    earned
    
    
    Average
    
    
    income/
    
    
    earnedbalance
    
    
    expense
    
    
    / paid
    
    
    balance
    
    
    expense
    
    
    / paid
    
    
    balance
    
    
    expense
    
    
    / paid(dollars in thousands)AssetsInterest bearing deposits
    
    $
    19,808
    
    
    $
    48
    
    
    
    0.24
    %
    
    $
    6,298
    
    
    $
    15
    
    
    
    0.24
    %
    
    $
    
    
    
    $
    
    
    
    
    
    %Federal funds sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    118
    
    
    
    3
    
    
    
    2.54Investment securities(1)
    
    
    69,357
    
    
    
    1,772
    
    
    
    2.55
    
    
    
    64,047
    
    
    
    2,163
    
    
    
    3.38
    
    
    
    46,658
    
    
    
    1,887
    
    
    
    4.04Total loans (2)(3)
    
    
    323,906
    
    
    
    18,860
    
    
    
    5.82
    
    
    
    354,482
    
    
    
    20,658
    
    
    
    5.83
    
    
    
    355,416
    
    
    
    23,550
    
    
    
    6.63Total earning assets
    
    
    413,071
    
    
    
    20,680
    
    
    
    5.01
    %
    
    
    424,839
    
    
    
    22,836
    
    
    
    5.38
    %
    
    
    402,192
    
    
    
    25,440
    
    
    
    6.33
    %Cash and due from banks
    
    
    38,945
    
    
    
    
    
    
    
    
    
    
    
    27,372
    
    
    
    
    
    
    
    
    
    
    
    12,174Other assets
    
    
    48,066
    
    
    
    
    
    
    
    
    
    
    
    37,789
    
    
    
    
    
    
    
    
    
    
    
    33,354Total assets
    
    $
    500,082
    
    
    
    
    
    
    
    
    
    
    $
    490,000
    
    
    
    
    
    
    
    
    
    
    $
    447,720Liabilities and shareholders
equityInterest bearing demand deposits
    
    $
    101,519
    
    
    
    382
    
    
    
    0.38
    %
    
    $
    98,394
    
    
    
    671
    
    
    
    0.68
    %
    
    $
    73,338
    
    
    
    548
    
    
    
    0.75
    %Money market deposits
    
    
    42,514
    
    
    
    221
    
    
    
    0.52
    
    
    
    41,844
    
    
    
    346
    
    
    
    0.83
    
    
    
    37,626
    
    
    
    312
    
    
    
    0.83Savings deposits
    
    
    51,011
    
    
    
    86
    
    
    
    0.17
    
    
    
    50,286
    
    
    
    90
    
    
    
    0.18
    
    
    
    48,573
    
    
    
    161
    
    
    
    0.33Time deposits
    
    
    124,810
    
    
    
    2,007
    
    
    
    1.61
    
    
    
    105,313
    
    
    
    2,062
    
    
    
    1.96
    
    
    
    110,743
    
    
    
    3,501
    
    
    
    3.16Short-term borrowings
    
    
    986
    
    
    
    5
    
    
    
    0.51
    
    
    
    24,292
    
    
    
    80
    
    
    
    0.33
    
    
    
    11,857
    
    
    
    202
    
    
    
    1.70Long-term borrowings
    
    
    9,973
    
    
    
    130
    
    
    
    1.30
    
    
    
    1,589
    
    
    
    27
    
    
    
    1.70
    
    
    
    
    
    
    
    
    
    
    
    Junior subordinated debentures
    
    
    10,310
    
    
    
    312
    
    
    
    3.03
    
    
    
    10,310
    
    
    
    371
    
    
    
    3.60
    
    
    
    10,310
    
    
    
    623
    
    
    
    6.04Other
    
    
    123
    
    
    
    4
    
    
    
    3.25
    
    
    
    212
    
    
    
    8
    
    
    
    3.77
    
    
    
    309
    
    
    
    17
    
    
    
    5.50Total interest bearing liabilities
    
    
    341,246
    
    
    
    3,147
    
    
    
    0.92
    %
    
    
    332,240
    
    
    
    3,655
    
    
    
    1.10
    %
    
    
    292,756
    
    
    
    5,364
    
    
    
    1.83
    %Noninterest bearing demand deposits
    
    
    110,923
    
    
    
    
    
    
    
    
    
    
    
    108,059
    
    
    
    
    
    
    
    
    
    
    
    111,999Other liabilities
    
    
    8,972
    
    
    
    
    
    
    
    
    
    
    
    5,862
    
    
    
    
    
    
    
    
    
    
    
    5,622Shareholders equity
    
    
    38,941
    
    
    
    
    
    
    
    
    
    
    
    43,839
    
    
    
    
    
    
    
    
    
    
    
    37,343Total liabilities and
shareholders equity
    
    $
    500,082
    
    
    
    
    
    
    
    
    
    
    $
    490,000
    
    
    
    
    
    
    
    
    
    
    $
    447,720Net interest income
    
    
    
    
    
    $
    17,533
    
    
    
    
    
    
    
    
    
    
    $
    19,181
    
    
    
    
    
    
    
    
    
    
    $
    20,076Net interest spread(4)
    
    
    
    
    
    
    
    
    
    
    4.09
    %
    
    
    
    
    
    
    
    
    
    
    4.28
    %
    
    
    
    
    
    
    
    
    
    
    4.50
    %Net interest margin(5)
    
    
    
    
    
    
    
    
    
    
    4.24
    %
    
    
    
    
    
    
    
    
    
    
    4.52
    %
    
    
    
    
    
    
    
    
    
    
    4.99
    %
 
 (1)
    
    Interest income is reflected on an actual basis and is not computed on a tax-equivalent
basis.(2)
    
    Average nonaccrual loan balances of $18.8 million for 2010, $25.1 million for 2009 and $5.2
million for 2008 are included in average loan balances for computational purposes.(3)
    
    Loan origination fees and costs are included in interest income as adjustments of the loan
yields over the life of the loan using the interest method. Loan interest income includes net
loan costs of $20,000, $214,000 and $288,000 for 2010, 2009 and 2008, respectively.(4)
    
    Net interest spread represents the average yield earned on interest-earning assets less the
average rate paid on interest-bearing liabilities.(5)
    
    Net interest margin is computed by dividing net interest income by total average earning
assets.  30




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##### Table of Contents



2010 compared to 2009
    
    
    2009 compared to 2008Increase (decrease) due to change in:
    
    
    Increase (decrease) due to change in:Average
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    AverageVolume(1)
    
    
    Rate(2)
    
    
    Mix(3)
    
    
    Total
    
    
    Volume(1)
    
    
    Rate(2)
    
    
    Mix(3)
    
    
    Total(dollars in thousands)Interest-earning assets:Interest bearing deposits
    
    $
    32
    
    
    $
    
    
    
    $
    1
    
    
    $
    33
    
    
    $
    
    
    
    $
    
    
    
    $
    15
    
    
    $
    15Federal funds sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    3
    
    
    
    (3
    )Investment securities
    
    
    179
    
    
    
    (527
    )
    
    
    (43
    )
    
    
    (391
    )
    
    
    703
    
    
    
    (311
    )
    
    
    (116
    )
    
    
    276Loans
    
    
    (1,782
    )
    
    
    (18
    )
    
    
    2
    
    
    
    (1,798
    )
    
    
    (62
    )
    
    
    (2,838
    )
    
    
    8
    
    
    
    (2,892
    )Total interest income
    
    
    (1,571
    )
    
    
    (545
    )
    
    
    (40
    )
    
    
    (2,156
    )
    
    
    638
    
    
    
    (3,152
    )
    
    
    (90
    )
    
    
    (2,604
    )Interest-bearing liabilities:Interest bearing demand deposits
    
    
    21
    
    
    
    (301
    )
    
    
    (9
    )
    
    
    (289
    )
    
    
    187
    
    
    
    (48
    )
    
    
    (16
    )
    
    
    123Money market deposits
    
    
    5
    
    
    
    (128
    )
    
    
    (2
    )
    
    
    (125
    )
    
    
    35
    
    
    
    
    
    
    
    (1
    )
    
    
    34Savings deposits
    
    
    1
    
    
    
    (5
    )
    
    
    
    
    
    
    (4
    )
    
    
    6
    
    
    
    (74
    )
    
    
    (3
    )
    
    
    (71
    )Time deposits
    
    
    382
    
    
    
    (369
    )
    
    
    (68
    )
    
    
    (55
    )
    
    
    (172
    )
    
    
    (1,333
    )
    
    
    66
    
    
    
    (1,439
    )Short-term borrowings
    
    
    (77
    )
    
    
    43
    
    
    
    (41
    )
    
    
    (75
    )
    
    
    212
    
    
    
    (163
    )
    
    
    (171
    )
    
    
    (122
    )Long-term borrowings
    
    
    142
    
    
    
    (6
    )
    
    
    (33
    )
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    27Junior subordinated debentures
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (252
    )Other borrowings
    
    
    (3
    )
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )
    
    
    (5
    )
    
    
    (5
    )
    
    
    1
    
    
    
    (9
    )Total interest expense
    
    
    471
    
    
    
    (826
    )
    
    
    (153
    )
    
    
    (508
    )
    
    
    263
    
    
    
    (1,875
    )
    
    
    (97
    )
    
    
    (1,709
    )Net interest income
    
    $
    (2,042
    )
    
    $
    281
    
    
    $
    113
    
    
    $
    (1,648
    )
    
    $
    375
    
    
    $
    (1,277
    )
    
    $
    7
    
    
    $
    (895
    )
 (1)
    
    The volume change in net interest income represents the change in average balance
multiplied by the previous years rate.(2)
    
    The rate change in net interest income represents the change in rate multiplied by the previous
years average balance.(3)
    
    The mix change in net interest income represents the change in average balance multiplied by
the change in rate. 2010 compared to 2009.
      31




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2009 compared to 2008.
    32




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##### Table of Contents



Provision for Loan Losses
   33




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##### Table of Contents



Non-Interest Income
  Years Ended December 31,
    
    
    Change during Year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009(dollars in thousands)Service charges on deposit accounts
    
    $
    3,642
    
    
    $
    3,796
    
    
    $
    3,951
    
    
    $
    (154
    )
    
    $
    (155
    )Sale of merchant processing
Portfolio
    
    
    1,435
    
    
    
    
    
    
    
    
    
    
    
    1,435
    
    
    
    Gain on sale of investments
    
    
    1,160
    
    
    
    10
    
    
    
    
    
    
    
    1,150
    
    
    
    10Gain on sale of loans, net
    
    
    1,055
    
    
    
    593
    
    
    
    111
    
    
    
    462
    
    
    
    482Earnings on bank owned life
insurance policies
    
    
    444
    
    
    
    434
    
    
    
    421
    
    
    
    10
    
    
    
    13Loan servicing fees
    
    
    195
    
    
    
    139
    
    
    
    96
    
    
    
    56
    
    
    
    43Merchant processing
    
    
    141
    
    
    
    282
    
    
    
    286
    
    
    
    (141
    )
    
    
    (4
    )Customer service fees
    
    
    135
    
    
    
    121
    
    
    
    114
    
    
    
    14
    
    
    
    7Safe deposit box and night
depository income
    
    
    66
    
    
    
    68
    
    
    
    67
    
    
    
    (2
    )
    
    
    1Impairment loss on investment
security
    
    
    
    
    
    
    
    
    
    
    (415
    )
    
    
    
    
    
    
    415Other income
    
    
    288
    
    
    
    309
    
    
    
    460
    
    
    
    (21
    )
    
    
    (151
    )Total non-interest income
    
    $
    8,561
    
    
    $
    5,752
    
    
    $
    5,091
    
    
    $
    2,809
    
    
    $
    661
  34




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2010 compared to 2009.
   2009 compared to 2008.
    35




---



##### Table of Contents



Non-Interest Expense
  Years Ended December 31,
    
    
    Change during Year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009(dollars in thousands)Salaries and employee benefits
    
    $
    9,732
    
    
    $
    11,054
    
    
    $
    10,884
    
    
    $
    (1,322
    )
    
    $
    170Occupancy and equipment
    
    
    3,096
    
    
    
    3,759
    
    
    
    3,838
    
    
    
    (663
    )
    
    
    (79
    )Outside service fees
    
    
    1,212
    
    
    
    990
    
    
    
    803
    
    
    
    222
    
    
    
    187FDIC insurance
    
    
    1,009
    
    
    
    1,125
    
    
    
    258
    
    
    
    (116
    )
    
    
    867Professional fees
    
    
    587
    
    
    
    789
    
    
    
    688
    
    
    
    (202
    )
    
    
    101OREO costs
    
    
    573
    
    
    
    370
    
    
    
    175
    
    
    
    203
    
    
    
    195Provision for OREO losses
    
    
    356
    
    
    
    4,800
    
    
    
    618
    
    
    
    (4,444
    )
    
    
    4,182Telephone and data communications
    
    
    338
    
    
    
    392
    
    
    
    400
    
    
    
    (54
    )
    
    
    (8
    )Loan collection costs
    
    
    261
    
    
    
    399
    
    
    
    205
    
    
    
    (138
    )
    
    
    194Advertising and promotion
    
    
    252
    
    
    
    327
    
    
    
    448
    
    
    
    (75
    )
    
    
    (121
    )Business development
    
    
    250
    
    
    
    333
    
    
    
    467
    
    
    
    (83
    )
    
    
    (134
    )Armored car and courier
    
    
    239
    
    
    
    281
    
    
    
    289
    
    
    
    (42
    )
    
    
    (8
    )Director compensation and retirement
    
    
    233
    
    
    
    293
    
    
    
    323
    
    
    
    (60
    )
    
    
    (30
    )Insurance
    
    
    218
    
    
    
    142
    
    
    
    235
    
    
    
    76
    
    
    
    (93
    )Postage
    
    
    207
    
    
    
    207
    
    
    
    208
    
    
    
    
    
    
    
    (1
    )Core deposit intangible amortization
    
    
    173
    
    
    
    173
    
    
    
    216
    
    
    
    
    
    
    
    (43
    )Stationery and supplies
    
    
    145
    
    
    
    183
    
    
    
    236
    
    
    
    (38
    )
    
    
    (53
    )(Gain) loss on sale of OREO
    
    
    (43
    )
    
    
    158
    
    
    
    
    
    
    
    (201
    )
    
    
    158Other operating expense
    
    
    396
    
    
    
    579
    
    
    
    184
    
    
    
    (183
    )
    
    
    395Total non-interest expense
    
    $
    19,234
    
    
    $
    26,354
    
    
    $
    20,475
    
    
    $
    (7,120
    )
    
    $
    5,879
 2010 compared to 2009.
   36




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##### Table of Contents



2009 compared to 2008.
    37




---



##### Table of Contents



Provision for Income Taxes.
   38




---



##### Table of Contents



Financial Condition
 Loan Portfolio.
     39




---



##### Table of Contents



At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Real estate  mortgage
    
    $
    162,513
    
    
    $
    161,397
    
    
    $
    151,943
    
    
    $
    128,357
    
    
    $
    116,329Real estate 
construction and land
development
    
    
    31,199
    
    
    
    38,061
    
    
    
    73,820
    
    
    
    76,478
    
    
    
    75,930Commercial
    
    
    33,433
    
    
    
    37,056
    
    
    
    42,528
    
    
    
    39,584
    
    
    
    36,182Consumer
    
    
    48,586
    
    
    
    54,442
    
    
    
    61,706
    
    
    
    72,768
    
    
    
    90,694Agriculture
    
    
    38,469
    
    
    
    41,722
    
    
    
    36,020
    
    
    
    35,762
    
    
    
    35,577Total loans
    
    
    314,200
    
    
    
    332,678
    
    
    
    366,017
    
    
    
    352,949
    
    
    
    354,712Less:Deferred costs
    
    
    (275
    )
    
    
    (298
    )
    
    
    (279
    )
    
    
    (564
    )
    
    
    (1,182
    )Allowance for loan losses
    
    
    7,324
    
    
    
    9,568
    
    
    
    7,224
    
    
    
    4,211
    
    
    
    3,917Net loans
    
    $
    307,151
    
    
    $
    323,408
    
    
    $
    359,072
    
    
    $
    349,302
    
    
    $
    351,977
  Within
    
    
    After One
    
    
    AfterOne Year
    
    
    Through Five Years
    
    
    Five Years
    
    
    Total(dollars in thousands)Real estate  mortgage
    
    $
    20,691
    
    
    $
    32,704
    
    
    $
    109,118
    
    
    $
    162,513Real estate  construction and land development
    
    
    10,328
    
    
    
    12,046
    
    
    
    8,825
    
    
    
    31,199Commercial
    
    
    10,229
    
    
    
    10,542
    
    
    
    12,662
    
    
    
    33,433Consumer
    
    
    7,057
    
    
    
    10,870
    
    
    
    30,659
    
    
    
    48,586Agriculture
    
    
    13,852
    
    
    
    9,621
    
    
    
    14,996
    
    
    
    38,469Total
    
    $
    62,157
    
    
    $
    75,783
    
    
    $
    176,260
    
    
    $
    314,200Loans maturing after one year with:Fixed interest rates
    
    
    
    
    
    $
    24,771
    
    
    $
    53,221
    
    
    $
    77,992Variable interest rates
    
    
    
    
    
    
    51,011
    
    
    
    123,040
    
    
    
    174,051Total
    
    
    
    
    
    $
    75,782
    
    
    $
    176,261
    
    
    $
    252,043
 Analysis of Asset Quality and Allowance for Loan Losses.
    40




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##### Table of Contents




    
    specific allocation determined in accordance with ASC Topic 310  Receivables
(formerly FAS 114, Accounting for Impairment of a loan)based on probable losses on
specific loans.
 
    
    general reserves determined in accordance with guidance in ASC Topic 450 
Contingencies (formerly SFAS No. 5, Accounting for Contingencies),based on historical
loan loss experience adjusted for other qualitative risk factors both internal and
external to the Company.
  41




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##### Table of Contents




    
    loan origination
 
    
    loan renewal
 
    
    loan servicing actions (change in terms, collateral release, etc.)
 
    
    annual financial review
 
    
    delinquency monitoring and follow-up
 
    
    loan review process
 
    
    audit process
     42




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##### Table of Contents



For the Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Balance at beginning of period
    
    $
    9,568
    
    
    $
    7,224
    
    
    $
    4,211
    
    
    $
    3,917
    
    
    $
    3,256Charge-offs:Commercial and agricultural
    
    
    1,219
    
    
    
    663
    
    
    
    477
    
    
    
    83
    
    
    
    126Real estate mortgage
    
    
    3,105
    
    
    
    1,145
    
    
    
    95
    
    
    
    
    
    
    
    Real estate construction
    
    
    3,617
    
    
    
    10,133
    
    
    
    522
    
    
    
    46
    
    
    
    Consumer
    
    
    408
    
    
    
    559
    
    
    
    689
    
    
    
    657
    
    
    
    519Total charge-offs
    
    
    8,349
    
    
    
    12,500
    
    
    
    1,783
    
    
    
    786
    
    
    
    645Recoveries:Commercial and agricultural
    
    
    26
    
    
    
    18
    
    
    
    11
    
    
    
    53
    
    
    
    46Real estate mortgage
    
    
    396
    
    
    
    8
    
    
    
    14
    
    
    
    
    
    
    
    Real estate construction
    
    
    65
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    118
    
    
    
    228
    
    
    
    171
    
    
    
    227
    
    
    
    260Total recoveries
    
    
    605
    
    
    
    344
    
    
    
    196
    
    
    
    280
    
    
    
    306Net charge-offs
    
    
    7,744
    
    
    
    12,156
    
    
    
    1,587
    
    
    
    506
    
    
    
    339Provision for loan losses
    
    
    5,500
    
    
    
    14,500
    
    
    
    4,600
    
    
    
    800
    
    
    
    1,000Balance at end of period
    
    $
    7,324
    
    
    $
    9,568
    
    
    $
    7,224
    
    
    $
    4,211
    
    
    $
    3,917Net charge-offs during the period to
average loans
    
    
    2.39
    %
    
    
    3.43
    %
    
    
    0.45
    %
    
    
    0.14
    %
    
    
    0.10
    %Allowance for loan losses to total loans
    
    
    2.33
    %
    
    
    2.88
    %
    
    
    1.97
    %
    
    
    1.19
    %
    
    
    1.10
    %
      43




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##### Table of Contents



At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Nonaccrual loans
    
    $
    25,313
    
    
    $
    14,263
    
    
    $
    26,444
    
    
    $
    2,618
    
    
    $
    972Loans past due 90 days or more and
still accruing
    
    
    45
    
    
    
    28
    
    
    
    297
    
    
    
    14
    
    
    
    41Total nonperforming loans
    
    
    25,358
    
    
    
    14,291
    
    
    
    26,741
    
    
    
    2,632
    
    
    
    1,013Other real estate owned
    
    
    8,867
    
    
    
    11,204
    
    
    
    4,148
    
    
    
    402
    
    
    
    Other vehicles owned
    
    
    17
    
    
    
    65
    
    
    
    129
    
    
    
    135
    
    
    
    47Total nonperforming assets
    
    $
    34,242
    
    
    $
    25,560
    
    
    $
    31,018
    
    
    $
    3,169
    
    
    $
    1,060Interest income forgone on
nonaccrual loans
    
    $
    1,021
    
    
    $
    568
    
    
    $
    576
    
    
    $
    161
    
    
    $
    53Interest income recorded on a Cash
basis on nonaccrual loans
    
    $
    608
    
    
    $
    369
    
    
    $
    74
    
    
    $
    118
    
    
    $
    116Nonperforming loans to total Loans
    
    
    8.07
    %
    
    
    4.30
    %
    
    
    7.31
    %
    
    
    0.75
    %
    
    
    0.29
    %Nonperforming assets to total Assets
    
    
    7.07
    %
    
    
    4.84
    %
    
    
    6.78
    %
    
    
    0.70
    %
    
    
    0.22
    %
   44




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009(in thousands)Beginning Balance
    
    $
    11,204
    
    
    $
    4,148Additions
    
    
    1,438
    
    
    
    14,006Dispositions
    
    
    (3,419
    )
    
    
    (2,150
    )Write-downs
    
    
    (356
    )
    
    
    (4,800
    )Ending Balance
    
    $
    8,867
    
    
    $
    11,204
  45




---



##### Table of Contents



Investment Portfolio and Federal Funds Sold.
      December 31,Available-for-sale (fair value)
    
    2010
    
    
    2009
    
    
    2008(dollars in thousands)U.S. Treasuries
    
    $
    1,032
    
    
    $
    1,052
    
    
    $
    1,508U.S. Government agencies
    
    
    40,430
    
    
    
    55,889
    
    
    
    10,392Corporate debt securities
    
    
    
    
    
    
    
    
    
    
    1,550U.S. Government agency
mortgage-backed Securities
    
    
    21,273
    
    
    
    19,287
    
    
    
    12,357Municipal obligations
    
    
    282
    
    
    
    11,722
    
    
    
    Total
    
    $
    63,017
    
    
    $
    87,950
    
    
    $
    25,807
 December 31,Held-to-maturity (amortized cost)
    
    2010
    
    
    2009
    
    
    2008(dollars in thousands)Municipal obligations
    
    $
    
    
    
    $
    
    
    
    $
    12,567
  46




---



##### Table of Contents



(dollars in thousands)
    
    
    
    
    
    
    
    
    
    After One Through
    
    
    After Five ThroughAvailable-for-sale
    
    One Year or Less
    
    
    Five Years
    
    
    Ten Years
    
    
    After Ten Years
    
    
    Total(Fair Value)
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldU.S. Treasuries
    
    $
    1,032
    
    
    
    1.07
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    1,032
    
    
    
    1.07
    %U.S. Government agencies
    
    
    1,012
    
    
    
    1.17
    %
    
    
    39,418
    
    
    
    1.76
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    40,430
    
    
    
    1.74
    %U.S. Government agency
mortgage-backed securities
    
    
    405
    
    
    
    4.01
    %
    
    
    1,097
    
    
    
    3.84
    %
    
    
    3,263
    
    
    
    3.86
    %
    
    
    16,508
    
    
    
    3.21
    %
    
    
    21,273
    
    
    
    3.35
    %Municipal obligations
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    282
    
    
    
    4.85
    %
    
    
    
    
    
    
    
    %
    
    
    282
    
    
    
    4.85
    %Total
    
    $
    2,449
    
    
    
    1.59
    %
    
    $
    40,515
    
    
    
    1.81
    %
    
    $
    3,545
    
    
    
    3.97
    %
    
    $
    16,508
    
    
    
    3.21
    %
    
    $
    63,017
    
    
    
    2.29
    %
  47




---



##### Table of Contents



Deposits.
   
 (dollars in thousands)
 AmountRemaining Maturity:Three months or less
    
    $
    14,558Over three months to six months
    
    
    15,938Over six months to 12 months
    
    
    15,937Over 12 months
    
    
    5,671Total
    
    $
    52,104
  Short-term Borrowing Arrangements.
    48




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##### Table of Contents



Long-term Borrowing Arrangements.
 Capital Resources
      Capital Standards.
  49




---



##### Table of Contents



December 31, 2010
    
    
    December 31, 2009Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier 1 Leverage RatioPlumas Bancorp and Subsidiary
    
    $
    42,994
    
    
    
    8.9
    %
    
    $
    40,564
    
    
    
    7.9
    %Minimum regulatory requirement
    
    
    19,361
    
    
    
    4.0
    %
    
    
    20,652
    
    
    
    4.0
    %Plumas Bank
    
    
    43,262
    
    
    
    8.9
    %
    
    
    38,172
    
    
    
    7.4
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    24,190
    
    
    
    5.0
    %
    
    
    25,848
    
    
    
    5.0
    %Minimum regulatory requirement
    
    
    19,352
    
    
    
    4.0
    %
    
    
    20,678
    
    
    
    4.0
    %Tier 1 Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    42,994
    
    
    
    12.7
    %
    
    
    40,564
    
    
    
    10.4
    %Minimum regulatory requirement
    
    
    13,570
    
    
    
    4.0
    %
    
    
    15,641
    
    
    
    4.0
    %Plumas Bank
    
    
    43,262
    
    
    
    12.8
    %
    
    
    38,172
    
    
    
    9.8
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    20,342
    
    
    
    6.0
    %
    
    
    23,433
    
    
    
    6.0
    %Minimum regulatory requirement
    
    
    13,561
    
    
    
    4.0
    %
    
    
    15,622
    
    
    
    4.0
    %Total Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    
    47,274
    
    
    
    13.9
    %
    
    
    45,512
    
    
    
    11.6
    %Minimum regulatory requirement
    
    
    27,140
    
    
    
    8.0
    %
    
    
    31,281
    
    
    
    8.0
    %Plumas Bank
    
    
    47,539
    
    
    
    14.0
    %
    
    
    43,113
    
    
    
    11.0
    %Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan
    
    
    33,903
    
    
    
    10.0
    %
    
    
    39,056
    
    
    
    10.0
    %Minimum regulatory requirement
    
    
    27,123
    
    
    
    8.0
    %
    
    
    31,244
    
    
    
    8.0
    %
  50




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##### Table of Contents



Off-Balance Sheet Arrangements
 Loan Commitments.
 Operating Leases.
  Liquidity
   51




---



##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheet as of December 31, 2010 and 2009
    
    
    F-2Consolidated Statement of Operations for the years ended December 31, 2010, 2009 and 2008
    
    
    F-3Consolidated Statement of Changes in Shareholders Equity for the years ended December
31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statement of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-10
  52




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  F - 1




---



##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEET
 December 31, 2010 and 2009
 2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    64,628,000
    
    
    $
    59,493,000Investment securities
    
    
    63,017,000
    
    
    
    87,950,000Loans, less allowance for loan losses of $7,324,000
in 2010 and $9,568,000 in 2009
    
    
    307,151,000
    
    
    
    323,408,000Premises and equipment, net
    
    
    14,431,000
    
    
    
    14,544,000Intangible assets, net
    
    
    475,000
    
    
    
    648,000Bank owned life insurance
    
    
    10,463,000
    
    
    
    10,111,000Other real estate and vehicles acquired through foreclosure
    
    
    8,884,000
    
    
    
    11,269,000Accrued interest receivable and other assets
    
    
    15,431,000
    
    
    
    20,694,000Total assets
    
    $
    484,480,000
    
    
    $
    528,117,000LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Non-interest bearing
    
    $
    111,802,000
    
    
    $
    111,958,000Interest bearing
    
    
    313,085,000
    
    
    
    321,297,000Total deposits
    
    
    424,887,000
    
    
    
    433,255,000Short-term borrowings
    
    
    
    
    
    
    20,000,000Long-term debt
    
    
    
    
    
    
    20,000,000Accrued interest payable and other liabilities
    
    
    11,295,000
    
    
    
    6,321,000Junior subordinated deferrable interest debentures
    
    
    10,310,000
    
    
    
    10,310,000Total liabilities
    
    
    446,492,000
    
    
    
    489,886,000Commitments and contingencies (Note 11)Shareholders equity:Serial preferred stock  no par value; 10,000,000
shares authorized; 11,949 issued and outstanding
at December 31, 2010 and 2009
    
    
    11,682,000
    
    
    
    11,595,000Common stock  no par value; 22,500,000 shares
authorized; issued and outstanding  4,776,339
shares at December 31, 2010 and 2009
    
    
    6,027,000
    
    
    
    5,970,000Retained earnings
    
    
    20,331,000
    
    
    
    20,044,000Accumulated other comprehensive (loss) income
    
    
    (52,000
    )
    
    
    622,000Total shareholders equity
    
    
    37,988,000
    
    
    
    38,231,000Total liabilities and shareholders equity
    
    $
    484,480,000
    
    
    $
    528,117,000
 The accompanying notes are an integral
part of these consolidated financial statements.
  F - 2




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Interest income:Interest and fees on loans
    
    $
    18,860,000
    
    
    $
    20,658,000
    
    
    $
    23,550,000Interest on investment securities:Taxable
    
    
    1,649,000
    
    
    
    1,708,000
    
    
    
    1,398,000Exempt from Federal income taxes
    
    
    123,000
    
    
    
    455,000
    
    
    
    489,000Other
    
    
    48,000
    
    
    
    15,000
    
    
    
    3,000Total interest income
    
    
    20,680,000
    
    
    
    22,836,000
    
    
    
    25,440,000Interest expense:Interest on deposits
    
    
    2,696,000
    
    
    
    3,169,000
    
    
    
    4,522,000Interest on borrowings
    
    
    135,000
    
    
    
    80,000
    
    
    
    202,000Interest on junior subordinated
deferrable interest debentures
    
    
    312,000
    
    
    
    371,000
    
    
    
    623,000Other
    
    
    4,000
    
    
    
    35,000
    
    
    
    17,000Total interest expense
    
    
    3,147,000
    
    
    
    3,655,000
    
    
    
    5,364,000Net interest income before
provision for loan losses
    
    
    17,533,000
    
    
    
    19,181,000
    
    
    
    20,076,000Provision for loan losses
    
    
    5,500,000
    
    
    
    14,500,000
    
    
    
    4,600,000Net interest income after
provision for loan losses
    
    
    12,033,000
    
    
    
    4,681,000
    
    
    
    15,476,000Non-interest income:Service charges
    
    
    3,642,000
    
    
    
    3,796,000
    
    
    
    3,951,000Sale of merchant processing portfolio
    
    
    1,435,000
    
    
    
    
    
    
    
    Gain on sale of investments
    
    
    1,160,000
    
    
    
    10,000
    
    
    
    Gain on sale of loans
    
    
    1,055,000
    
    
    
    593,000
    
    
    
    111,000Impairment loss on investment
security
    
    
    
    
    
    
    
    
    
    
    (415,000
    )Earnings on bank owned life
insurance policies
    
    
    444,000
    
    
    
    434,000
    
    
    
    421,000Other
    
    
    825,000
    
    
    
    919,000
    
    
    
    1,023,000Total non-interest income
    
    
    8,561,000
    
    
    
    5,752,000
    
    
    
    5,091,000
   F - 3




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF OPERATIONS   For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Non-interest expenses:Salaries and employee benefits
    
    $
    9,732,000
    
    
    $
    11,054,000
    
    
    $
    10,884,000Occupancy and equipment
    
    
    3,096,000
    
    
    
    3,759,000
    
    
    
    3,838,000Provision for losses on other real
estate
    
    
    356,000
    
    
    
    4,800,000
    
    
    
    618,000Other
    
    
    6,050,000
    
    
    
    6,741,000
    
    
    
    5,135,000Total non-interest expenses
    
    
    19,234,000
    
    
    
    26,354,000
    
    
    
    20,475,000Income (loss) before income
taxes
    
    
    1,360,000
    
    
    
    (15,921,000
    )
    
    
    92,000Provision (benefit) for income taxes
    
    
    389,000
    
    
    
    (6,775,000
    )
    
    
    (212,000
    )Net income (loss)
    
    
    971,000
    
    
    
    (9,146,000
    )
    
    
    304,000Preferred stock dividends accrued and
discount accretion
    
    
    (684,000
    )
    
    
    (628,000
    )
    
    
    Net income (loss) available
to common shareholders
    
    $
    287,000
    
    
    $
    (9,774,000
    )
    
    $
    304,000Basic earnings (loss) per common share
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06Diluted earnings (loss) per common share
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06Common dividends per share
    
    $
    
    
    
    $
    
    
    
    $
    0.24
 The accompanying notes are an integral
part of these consolidated financial statements.
  F - 4




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 For the Years Ended December 31, 2010, 2009 and 2008
 AccumulatedOtherComprehensive
    
    
    Total
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Retained
    
    
    (Loss) Income
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    (Net of Taxes)
    
    
    Equity
    
    
    Income (loss)Balance, January 1, 2008
    
    
    
    
    
    
    
    
    
    
    4,869,130
    
    
    $
    5,042,000
    
    
    $
    32,204,000
    
    
    $
    (107,000
    )
    
    $
    37,139,000Cumulative effect of change in accounting principle,
adoption of EITF 06-4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (420,000
    )
    
    
    
    
    
    
    (420,000
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304,000
    
    
    
    
    
    
    
    304,000
    
    
    $
    304,000Other comprehensive income, net of tax:Net change in unrealized (losses)/gains
on available-for-sale investment
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    424,000
    
    
    
    424,000
    
    
    
    424,000Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    728,000Cash dividends  $0.24 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,153,000
    )
    
    
    
    
    
    
    (1,153,000
    )Stock options exercised and related
tax benefit
    
    
    
    
    
    
    
    
    
    
    12,476
    
    
    
    68,000
    
    
    
    
    
    
    
    
    
    
    
    68,000Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292,000
    
    
    
    
    
    
    
    
    
    
    
    292,000Repurchase and retirement of
common stock
    
    
    
    
    
    
    
    
    
    
    (106,267
    )
    
    
    (100,000
    )
    
    
    (1,117,000
    )
    
    
    
    
    
    
    (1,217,000
    )Balance, December 31, 2008
    
    
    
    
    
    
    
    
    
    
    4,775,339
    
    
    $
    5,302,000
    
    
    $
    29,818,000
    
    
    $
    317,000
    
    
    $
    35,437,000
   F - 5




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY   For the Years Ended December 31, 2010, 2009 and 2008
 AccumulatedOtherComprehensive
    
    
    Total
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Retained
    
    
    (loss) Income
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Earnings
    
    
    (Net of Taxes)
    
    
    Equity
    
    
    Income (loss)Balance, December 31, 2008
    
    
    
    
    
    
    
    
    
    
    4,775,339
    
    
    $
    5,302,000
    
    
    $
    29,818,000
    
    
    $
    317,000
    
    
    $
    35,437,000Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,146,000
    )
    
    
    
    
    
    
    (9,146,000
    )
    
    $
    (9,146,000
    )Other comprehensive income, net of tax:Unrealized gains on securities transferred
from held-to-maturity to available-
for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197,000
    
    
    
    197,000
    
    
    
    197,000Net change in unrealized gains
on available-for-sale investment
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,000
    
    
    
    108,000
    
    
    
    108,000Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,841,000
    )Preferred stock issued
    

    
    11,949
    
    
    $
    11,516,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,516,000Stock warrants issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    407,000
    
    
    
    
    
    
    
    
    
    
    
    407,000Preferred stock dividends & accretion
    
    
    
    
    
    
    79,000
    
    
    
    
    
    
    
    
    
    
    
    (628,000
    )
    
    
    
    
    
    
    (549,000
    )Stock options exercised and related
tax benefit
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256,000
    
    
    
    
    
    
    
    
    
    
    
    256,000Balance, December 31, 2009
    
    
    11,949
    
    
    
    11,595,000
    
    
    
    4,776,339
    
    
    
    5,970,000
    
    
    
    20,044,000
    
    
    
    622,000
    
    
    
    38,231,000Comprehensive Income:Net lncome
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    971,000
    
    
    
    
    
    
    
    971,000
    
    
    $
    971,000Other comprehensive loss, net of tax:Net change in unrealized gains
on available-for-sale investment
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (674,000
    )
    
    
    (674,000
    )
    
    
    (674,000
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    297,000Preferred stock dividends & accretion
    
    
    
    
    
    
    87,000
    
    
    
    
    
    
    
    
    
    
    
    (684,000
    )
    
    
    
    
    
    
    (597,000
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57,000
    
    
    
    
    
    
    
    
    
    
    
    57,000Balance, December 31, 2010
    
    
    11,949
    
    
    $
    11,682,000
    
    
    
    4,776,339
    
    
    $
    6,027,000
    
    
    $
    20,331,000
    
    
    $
    (52,000
    )
    
    $
    37,988,000
 The accompanying notes are an integral part of these consolidated financial statements.
  F - 6




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    971,000
    
    
    $
    (9,146,000
    )
    
    $
    304,000Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Provision for loan losses
    
    
    5,500,000
    
    
    
    14,500,000
    
    
    
    4,600,000Change in deferred loan origination
costs/fees, net
    
    
    (79,000
    )
    
    
    (19,000
    )
    
    
    285,000Stock-based compensation expense
    
    
    57,000
    
    
    
    256,000
    
    
    
    292,000Depreciation and amortization
    
    
    1,693,000
    
    
    
    1,929,000
    
    
    
    1,984,000Amortization of investment security
premiums
    
    
    514,000
    
    
    
    283,000
    
    
    
    56,000Accretion of investment security discounts
    
    
    (55,000
    )
    
    
    (53,000
    )
    
    
    (55,000
    )Impairment loss on investment security
    
    
    
    
    
    
    
    
    
    
    415,000Gain on sale of investments
    
    
    (1,160,000
    )
    
    
    (10,000
    )Gain on sale of loans held for sale
    
    
    (1,055,000
    )
    
    
    (593,000
    )Loans originated for sale
    
    
    (21,286,000
    )
    
    
    (12,598,000
    )Proceeds from loan sales
    
    
    14,873,000
    
    
    
    11,393,000Provision for losses on other real estate
    
    
    356,000
    
    
    
    4,800,000
    
    
    
    618,000Proceeds from secured borrowing
    
    
    4,284,000Net loss (gain) on sale of premises and
equipment
    
    
    4,000
    
    
    
    (6,000
    )
    
    
    13,000Net (gain) loss on sale of other
real estate and vehicles owned
    
    
    (58,000
    )
    
    
    198,000
    
    
    
    18,000Earnings on bank owned life insurance
policies
    
    
    (444,000
    )
    
    
    (434,000
    )
    
    
    (421,000
    )Expenses on bank owned life insurance
policies
    
    
    92,000
    
    
    
    89,000
    
    
    
    83,000Provision (benefit) for deferred income taxes
    
    
    389,000
    
    
    
    (3,852,000
    )
    
    
    (1,459,000
    )Decrease (increase) in accrued interest
receivable and other assets
    
    
    5,322,000
    
    
    
    (7,022,000
    )
    
    
    297,000Increase (decrease) increase in accrued interest
payable and other liabilities
    
    
    197,000
    
    
    
    355,000
    
    
    
    (711,000
    )Net cash provided by operating
activities
    
    
    10,115,000
    
    
    
    70,000
    
    
    
    6,319,000
 (Continued)
  F - 7




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF CASH FLOWS   For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Cash flows from investing activities:Proceeds from matured and called available-
for-sale investment securities
    
    $
    31,895,000
    
    
    $
    8,000,000
    
    
    $
    16,475,000Proceeds from matured and called held-to-
maturity investment securities
    
    
    
    
    
    
    1,836,000
    
    
    
    920,000Proceeds from sale of held-to-maturity securities
    
    
    
    
    
    
    943,000Proceeds from sale of available-for-sale securities
    
    
    40,902,000
    
    
    
    86,000Purchases of available-for-sale investment
securities
    
    
    (57,238,000
    )
    
    
    (65,876,000
    )
    
    
    (2,990,000
    )Purchases of held-to-maturity investment
securities
    
    
    
    
    
    
    (1,586,000
    )Proceeds from principal repayments from
available-for-sale government-guaranteed
mortgage-backed securities
    
    
    8,927,000
    
    
    
    7,320,000
    
    
    
    2,819,000Net decrease (increase) in loans
    
    
    16,623,000
    
    
    
    8,683,000
    
    
    
    (19,520,000
    )Proceeds from sale of vehicles
    
    
    177,000
    
    
    
    270,000
    
    
    
    376,000Proceeds from sale of other real estate
    
    
    3,462,000
    
    
    
    1,992,000Purchases of premises and equipment
    
    
    (1,210,000
    )
    
    
    (253,000
    )
    
    
    (2,566,000
    )Net cash provided by (used in)
investing activities
    
    
    43,538,000
    
    
    
    (38,585,000
    )
    
    
    (4,486,000
    )Cash flows from financing activities:Net (decrease) increase in demand,
interest-bearing and savings deposits
    
    
    (3,353,000
    )
    
    
    37,383,000
    
    
    
    9,658,000Net (decrease) increase in time deposits
    
    
    (5,015,000
    )
    
    
    24,379,000
    
    
    
    (30,105,000
    )Net (decrease) increase in short-term
borrowings
    
    
    (20,000,000
    )
    
    
    (14,000,000
    )
    
    
    26,500,000Proceeds from long-term debt
    
    
    
    
    
    
    20,000,000Repayment of long-term debt
    
    
    (20,000,000
    )Issuance of preferred stock, net of discount
    
    
    
    
    
    
    11,516,000Payment of cash dividend on preferred stock
    
    
    (150,000
    )
    
    
    (473,000
    )Issuance of common stock warrant
    
    
    
    
    
    
    407,000Proceeds from exercise of stock options
    
    
    
    
    
    
    5,000
    
    
    
    68,000Repurchase and retirement of common stock
    
    
    
    
    
    
    
    
    
    
    (1,217,000
    )Payment of cash dividends on common stock
    
    
    
    
    
    
    
    
    
    
    (1,153,000
    )Net cash (used in) provided by financing
activities
    
    
    (48,518,000
    )
    
    
    79,217,000
    
    
    
    3,751,000Increase in cash and cash
equivalents
    
    
    5,135,000
    
    
    
    40,702,000
    
    
    
    5,584,000Cash and cash equivalents at beginning of year
    
    
    59,493,000
    
    
    
    18,791,000
    
    
    
    13,207,000Cash and cash equivalents at end of year
    
    $
    64,628,000
    
    
    $
    59,493,000
    
    
    $
    18,791,000
   F - 8




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF CASH FLOWS   For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Supplemental disclosure of cash flow information:Cash paid during the year for:Interest expense
    
    $
    3,000,000
    
    
    $
    3,666,000
    
    
    $
    5,804,000Income taxes
    
    $
    
    
    
    $
    65,000
    
    
    $
    1,385,000Non-cash investing activities:Real estate acquired through foreclosure
    
    $
    1,391,000
    
    
    $
    14,053,000
    
    
    $
    4,364,000Vehicles acquired through repossession
    
    $
    112,000
    
    
    $
    245,000
    
    
    $
    388,000Reclassification of loans to other assets
    
    
    
    
    
    
    
    
    
    $
    113,000Investment securities transferred from
held-to-maturity to available-for-sale
    
    $
    
    
    
    $
    11,722,000
    
    
    $Net change in unrealized gain/loss on
available-for-sale investment securities
    
    $
    (674,000
    )
    
    $
    108,000
    
    
    $
    424,000
 The accompanying notes are an integral
part of these consolidated financial statements.
 
  F - 9




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    THE BUSINESS OF PLUMAS BANCORP
    2.
    
    REGULATORY MATTERS
  
    
    Within 240 days of the date of the Order, increase and maintain the Banks
leverage ratio to at least 10% and maintain its total risk-based capital ratio at
13% or more;
 
    
    Reduce or eliminate certain classified assets by $19.4 million within 180 days
of the date of the Order and reducing them by an additional $4.9 million within 240
days of the Order;
 
    
    Obtain an independent study of the management and personnel structure of the
Bank within 150 days of the date of the Order to determine whether the Bank is
staffed by qualified individuals commensurate with its size and risk profile to
ensure the safe and profitable operation of the Bank;
    
    Not pay cash dividends to Plumas Bancorp without the prior written consent of
the FDIC and DFI.
  F - 10




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2.
    
    REGULATORY MATTERS(Continued)
  3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Consolidation and Basis of Presentation
    Reclassifications
 
  Segment Information
   F - 11




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Use of Estimates
  Cash and Cash Equivalents
  Investment Securities
  
    
    Available-for-sale securities reported at fair value, with unrealized gains and
losses excluded from earnings and reported, net of taxes, as accumulated other
comprehensive income (loss) within shareholders equity.
 
    
    Held-to-maturity securities, which management has the positive intent and ability to
hold, reported at amortized cost, adjusted for the accretion of discounts and
amortization of premiums.
  
  F - 12




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Investment Securities
  Investment in Federal Home Loan Bank Stock
  Loans Held for Sale, Loan Sales and Servicing
    F - 13




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Loans Held for Sale, Loan Sales and Servicing
       F - 14




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Loans
     Allowance for Loan Losses
   F - 15




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Allowance for Loan Losses
      Pass
  F - 16




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Allowance for Loan Losses
 Watch
 Substandard
 Doubtful
 Loss
  Commercial
 Agricultural
 Real estate  Residential and Home Equity Lines of Credit
  F - 17




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Allowance for Loan Losses
 Real estate  Commercial
 Real estate  Construction and Land Development
 Installment
 Other
   F - 18




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Allowance for Loan Losses
  Other Real Estate
  Intangible Assets
  Premises and Equipment
   F - 19




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Income Taxes
   Accounting for Uncertainty in Income Taxes
 
  Earnings (Loss) Per Share
   F - 20




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Stock-Based Compensation
   
  2008Expected life of stock options
    
    5.2 yearsInterest ratestock options
    
    
    2.98
    %Volatilitystock options
    
    
    25.3
    %Dividend yields
    
    
    2.61
    %Weighted-average fair value of options granted during
the year
    
    $
    2.54
   F - 21




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Adoption of New Financial Accounting Standards
 Accounting for Transfers of Financial Assets
 , Accounting for Transfers of Financial Assets (Statement
166)
 Fair Value Measurements
 , Improving Disclosures about Fair Value
Measurements,
  F - 22




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
 Adoption of New Financial Accounting Standards
 Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit
Losses
 Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses
 4.
    
    FAIR VALUE MEASUREMENTS
 Fair Value of Financial Instruments
  December 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    64,628,000
    
    
    $
    64,628,000
    
    
    $
    59,493,000
    
    
    $
    59,493,000Investment securities
    
    
    63,017,000
    
    
    
    63,017,000
    
    
    
    87,950,000
    
    
    
    87,950,000Loans
    
    
    307,151,000
    
    
    
    304,045,000
    
    
    
    323,408,000
    
    
    
    325,589,000FHLB stock
    
    
    2,188,000
    
    
    
    2,188,000
    
    
    
    1,933,000
    
    
    
    1,933,000Bank owned life insurance
    
    
    10,463,000
    
    
    
    10,463,000
    
    
    
    10,111,000
    
    
    
    10,111,000Accrued interest receivable
    
    
    1,784,000
    
    
    
    1,784,000
    
    
    
    2,487,000
    
    
    
    2,487,000Financial liabilities:Deposits
    
    $
    424,887,000
    
    
    $
    425,009,000
    
    
    $
    433,255,000
    
    
    $
    433,311,000Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    20,000,000
    
    
    
    20,000,000Long-term debt
    
    
    
    
    
    
    
    
    
    
    20,000,000
    
    
    
    19,817,000Junior subordinated deferrable
interest debentures
    
    
    10,310,000
    
    
    
    2,992,000
    
    
    
    10,310,000
    
    
    
    2,909,000Accrued interest payable
    
    
    623,000
    
    
    
    623,000
    
    
    
    476,000
    
    
    
    476,000
   Cash and cash equivalents:
 Investment securities:
  F - 23




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    FAIR VALUE MEASUREMENTS (Continued)
 Loans:
  FHLB stock:
 Bank owned life insurance:
 Deposits:
 Short-term borrowings:
 Long-term debt:
 Junior subordinated deferrable interest debentures:
 Commitments to extend credit and letters of credit:
   F - 24




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    FAIR VALUE MEASUREMENTS (Continued)
          F - 25




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    FAIR VALUE MEASUREMENTS (Continued)
   Fair Value Measurements at December 31, 2010 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:U.S. Treasury
securities
    
    $
    1,032,000
    
    
    $
    1,032,000U.S. Government
agencies
    
    
    40,430,000
    
    
    
    40,430,000U.S. Government
agencies
collateralized
by mortgage
obligations
    
    
    21,273,000
    
    
    
    
    
    
    $
    21,273,000Obligations of
states and
political
subdivisions
    
    
    282,000
    
    
    
    282,000$
    63,017,000
    
    
    $
    41,744,000
    
    
    $
    21,273,000
    
    
    $
    0
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    UnobservableTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Assets:U.S. Treasury
securities
    
    $
    1,052,000
    
    
    $
    1,052,000U.S. Government
agencies
    
    
    55,889,000
    
    
    
    55,889,000U.S. Government
agencies
collateralized
by mortgage
obligations
    
    
    19,287,000
    
    
    
    
    
    
    $
    19,287,000Obligations of
states and
political
subdivisions
    
    
    11,722,000
    
    
    
    11,722,000$
    87,950,000
    
    
    $
    68,663,000
    
    
    $
    19,287,000
    
    
    $
    0
  F - 26




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    FAIR VALUE MEASUREMENTS(Continued)
   Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total GainsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Assets:Impaired
loans
    
    $
    13,521,000
    
    
    
    
    
    
    $
    13,521,000
    
    
    
    
    
    
    $
    (1,356,000
    )Other real estate
    
    
    8,867,000
    
    
    
    
    
    
    
    8,867,000
    
    
    
    
    
    
    
    (235,000
    )$
    22,388,000
    
    
    
    
    
    
    $
    22,388,000
    
    
    
    
    
    
    $
    (1,591,000
    )
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total GainsTotal Fair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Assets:Impaired
loans
    
    $
    9,435,000
    
    
    
    
    
    
    $
    9,435,000
    
    
    
    
    
    
    $
    (5,127,000
    )Other real estate
    
    
    11,204,000
    
    
    
    
    
    
    
    11,204,000
    
    
    
    
    
    
    
    (4,457,000
    )$
    20,639,000
    
    
    
    
    
    
    $
    20,639,000
    
    
    
    
    
    
    $
    (9,584,000
    )
  Impaired Loans:
  F - 27




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    FAIR VALUE MEASUREMENTS(Continued)
 Other Real Estate:
 5.
    
    INVESTMENT SECURITIES
  Available-for-Sale
 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,025,000
    
    
    $
    7,000
    
    
    
    
    
    
    $
    1,032,000U.S. Government agencies
    
    
    40,662,000
    
    
    
    58,000
    
    
    $
    (290,000
    )
    
    
    40,430,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    21,110,000
    
    
    
    270,000
    
    
    
    (107,000
    )
    
    
    21,273,000Obligations of states and
political subdivisions
    
    
    308,000
    
    
    
    
    
    
    
    (26,000
    )
    
    
    282,000$
    63,105,000
    
    
    $
    335,000
    
    
    $
    (423,000
    )
    
    $
    63,017,000
  2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securities:U.S. Treasury securities
    
    $
    1,059,000
    
    
    
    
    
    
    $
    (7,000
    )
    
    $
    1,052,000U.S. Government agencies
    
    
    55,520,000
    
    
    $
    420,000
    
    
    
    (51,000
    )
    
    
    55,889,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    18,925,000
    
    
    
    362,000
    
    
    
    
    
    
    
    19,287,000Obligations of states and
political subdivisions
    
    
    11,387,000
    
    
    
    360,000
    
    
    
    (25,000
    )
    
    
    11,722,000$
    86,891,000
    
    
    $
    1,142,000
    
    
    $
    (83,000
    )
    
    $
    87,950,000
   F - 28




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5.
    
    INVESTMENT SECURITIES(Continued)
 Held-to-Maturity
   Less than 12 MonthsFair
    
    
    UnrealizedDecember 31, 2010
    
    Value
    
    
    LossesDebt securities:U.S. Government agencies
    
    $
    14,763,000
    
    
    $
    290,000U.S. Government agencies
collateralized by mortgage
obligations
    
    
    13,205,000
    
    
    
    107,000Obligations of states and political subdivisions
    
    
    282,000
    
    
    
    26,000$
    28,250,000
    
    
    $
    423,000
 Less than 12 MonthsFair
    
    
    UnrealizedDecember 31, 2009
    
    Value
    
    
    LossesDebt securities:U.S. Treasury securities
    
    $
    1,052,000
    
    
    $
    7,000U.S. Government agencies
    
    
    10,787,000
    
    
    
    51,000Obligations of states and political subdivisions
    
    
    1,208,000
    
    
    
    25,000$
    13,047,000
    
    
    $
    83,000
   F - 29




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5.
    
    INVESTMENT SECURITIES(Continued)
   Estimated
    
    
    EstimatedAmortized
    
    
    FairCost
    
    
    ValueWithin one year
    
    $
    2,033,000
    
    
    $
    2,044,000After one year through five years
    
    
    39,654,000
    
    
    
    39,418,000After five years through ten years
    
    
    308,000
    
    
    
    282,00041,995,000
    
    
    
    41,744,000Investment securities not due at a single maturity date:Government-guaranteed mortgage-backed securities
    
    
    21,110,000
    
    
    
    21,273,000$
    63,105,000
    
    
    $
    63,017,000
   F - 30




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6.
    
    LOANS AND THE ALLOWANCE FOR LOAN LOSSES
  December 31,2010
    
    
    2009Commercial
    
    $
    33,433,000
    
    
    $
    37,056,000Agricultural
    
    
    38,469,000
    
    
    
    41,722,000Real estate  residential
    
    
    43,291,000
    
    
    
    59,815,000Real estate  commercial
    
    
    119,222,000
    
    
    
    101,582,000Real estate  construction and land development
    
    
    31,199,000
    
    
    
    38,061,000Equity lines of credit
    
    
    36,946,000
    
    
    
    34,814,000Installment
    
    
    2,879,000
    
    
    
    3,334,000Other
    
    
    8,761,000
    
    
    
    16,294,000314,200,000
    
    
    
    332,678,000Deferred loan costs, net
    
    
    275,000
    
    
    
    298,000Allowance for loan losses
    
    
    (7,324,000
    )
    
    
    (9,568,000
    )$
    307,151,000
    
    
    $
    323,408,000
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    9,568,000
    
    
    $
    7,224,000
    
    
    $
    4,211,000Provision charged to operations
    
    
    5,500,000
    
    
    
    14,500,000
    
    
    
    4,600,000Losses charged to allowance
    
    
    (8,349,000
    )
    
    
    (12,500,000
    )
    
    
    (1,783,000
    )Recoveries
    
    
    605,000
    
    
    
    344,000
    
    
    
    196,000Balance, end of year
    
    $
    7,324,000
    
    
    $
    9,568,000
    
    
    $
    7,224,000
    F - 31




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6.
    
    LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)
    Commercial Credit ExposureCredit Risk Profile by Internally Assigned GradeReal Estate 
    
    
    Real Estate Commercial
    
    
    Agricultural
    
    
    Residential
    
    
    CommercialGrade:Pass
    
    $
    28,923
    
    
    $
    34,081
    
    
    $
    39,194
    
    
    $
    96,527Watch
    
    
    904
    
    
    
    646
    
    
    
    1,738
    
    
    
    8,192Substandard
    
    
    3,606
    
    
    
    3,742
    
    
    
    2,295
    
    
    
    14,503Doubtful
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    Total
    
    $
    33,433
    
    
    $
    38,469
    
    
    $
    43,291
    
    
    $
    119,222
 Commercial Credit ExposureCredit Risk Profile by Internally Assigned GradeReal Estate Construction
    
    
    Equity LOC
    
    
    TotalGrade:Pass
    
    $
    15,987
    
    
    $
    34,787
    
    
    $
    249,499Watch
    
    
    2,165
    
    
    
    585
    
    
    
    14,230Substandard
    
    
    12,982
    
    
    
    1,502
    
    
    
    38,630Doubtful
    
    
    65
    
    
    
    72
    
    
    
    201Total
    
    $
    31,199
    
    
    $
    36,946
    
    
    $
    302,560
 Consumer Credit ExposureCredit Risk Profile Based on Payment ActivityInstallment
    
    
    Other
    
    
    TotalGrade:Performing
    
    $
    2,830
    
    
    $
    8,643
    
    
    $
    11,473Non-performing
    
    
    49
    
    
    
    118
    
    
    
    167Total
    
    $
    2,879
    
    
    $
    8,761
    
    
    $
    11,640
  F - 32




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6.
    
    LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)
  Real Estate-
    
    
    Real Estate-
    
    
    Real Estate-Commercial
    
    
    Agricultural
    
    
    Residential
    
    
    Commercial
    
    
    Construction
    
    
    Equity LOC
    
    
    Installment
    
    
    Other
    
    
    TotalAllowance for Loan LossesEnding balance
    
    $
    760
    
    
    $
    184
    
    
    $
    632
    
    
    $
    1,819
    
    
    $
    3,011
    
    
    $
    652
    
    
    $
    66
    
    
    $
    200
    
    
    $
    7,324Ending balance: individually
evaluated for impairment
    
    $
    22
    
    
    $
    
    
    
    $
    121
    
    
    $
    201
    
    
    $
    1,479
    
    
    $
    72
    
    
    $
    8
    
    
    $
    
    
    
    $
    1,903Ending balance: collectively
evaluated for impairment
    
    $
    738
    
    
    $
    184
    
    
    $
    511
    
    
    $
    1,618
    
    
    $
    1,532
    
    
    $
    580
    
    
    $
    58
    
    
    $
    200
    
    
    $
    5,421LoansEnding balance
    
    $
    33,433
    
    
    $
    38,469
    
    
    $
    43,291
    
    
    $
    119,222
    
    
    $
    31,199
    
    
    $
    36,946
    
    
    $
    2,879
    
    
    $
    8,761
    
    
    $
    314,200Ending balance: individually
evaluated for impairment
    
    $
    2,706
    
    
    $
    868
    
    
    $
    3,870
    
    
    $
    8,204
    
    
    $
    11,501
    
    
    $
    1,382
    
    
    $
    106
    
    
    $
    118
    
    
    $
    28,755Ending balance: collectively
evaluated for impairment
    
    $
    30,727
    
    
    $
    37,601
    
    
    $
    39,421
    
    
    $
    111,018
    
    
    $
    19,698
    
    
    $
    35,564
    
    
    $
    2,773
    
    
    $
    8,643
    
    
    $
    285,445
  F - 33




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6.
    
    LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)
  30-89 Days
    
    
    90 Days and
    
    
    
    
    
    
    TotalPast Due
    
    
    Still Accruing
    
    
    Nonaccrual
    
    
    Past Due
    
    
    Current
    
    
    TotalCommercial:Commercial
    
    $
    352
    
    
    $
    
    
    
    $
    2,706
    
    
    $
    3,058
    
    
    $
    30,375
    
    
    $
    33,433Agricultural
    
    
    272
    
    
    
    
    
    
    
    868
    
    
    
    1,140
    
    
    
    37,329
    
    
    
    38,469Real estate  construction
    
    
    136
    
    
    
    
    
    
    
    9,797
    
    
    
    9,933
    
    
    
    21,266
    
    
    
    31,199Real estate
    
    
    802
    
    
    
    
    
    
    
    8,204
    
    
    
    9,006
    
    
    
    110,216
    
    
    
    119,222Residential:Real estate
    
    
    400
    
    
    
    
    
    
    
    2,189
    
    
    
    2,589
    
    
    
    40,702
    
    
    
    43,291Equity LOC
    
    
    494
    
    
    
    
    
    
    
    1,382
    
    
    
    1,876
    
    
    
    35,070
    
    
    
    36,946Consumer:Installment
    
    
    56
    
    
    
    
    
    
    
    49
    
    
    
    105
    
    
    
    2,774
    
    
    
    2,879Other
    
    
    348
    
    
    
    45
    
    
    
    118
    
    
    
    511
    
    
    
    8,250
    
    
    
    8,761Total
    
    $
    2,860
    
    
    $
    45
    
    
    $
    25,313
    
    
    $
    28,218
    
    
    $
    285,982
    
    
    $
    314,200
  Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance
recorded:Commercial
    
    $
    2,680
    
    
    $
    3,018Agricultural
    
    
    868
    
    
    
    1,109Real estate  construction
    
    
    4,151
    
    
    
    5,169Real estate
    
    
    5,994
    
    
    
    5,994Real estate  residential
    
    
    2,244
    
    
    
    2,245Equity Lines of Credit
    
    
    1,310
    
    
    
    1,310Installment
    
    
    98
    
    
    
    98Other
    
    
    118
    
    
    
    118With an allowance recorded:Commercial
    
    
    26
    
    
    
    26
    
    
    $
    22Agricultural
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    7,350
    
    
    
    8,770
    
    
    
    1,479Real estate  mortgage
    
    
    2,210
    
    
    
    2,210
    
    
    
    201Real estate  residential
    
    
    1,626
    
    
    
    1,743
    
    
    
    121Equity Lines of Credit
    
    
    72
    
    
    
    72
    
    
    
    72Installment
    
    
    8
    
    
    
    8
    
    
    
    8Other
    
    
    
    
    
    
    
    
    
    
    Total:Commercial
    
    
    2,706
    
    
    
    3,044
    
    
    
    22
    
    
    $
    1,924
    
    
    $
    11Agricultural
    
    
    868
    
    
    
    1,109
    
    
    
    
    
    
    
    1,454
    
    
    
    102Real estate  construction
    
    
    11,501
    
    
    
    13,939
    
    
    
    1,479
    
    
    
    8,440
    
    
    
    100Real estate  mortgage
    
    
    8,204
    
    
    
    8,204
    
    
    
    201
    
    
    
    7,516
    
    
    
    261Real estate  residential
    
    
    3,870
    
    
    
    3,988
    
    
    
    121
    
    
    
    750
    
    
    
    121Equity Lines of Credit
    
    
    1,382
    
    
    
    1,382
    
    
    
    72
    
    
    
    565
    
    
    
    Installment
    
    
    106
    
    
    
    106
    
    
    
    8
    
    
    
    44
    
    
    
    2Other
    
    
    118
    
    
    
    118
    
    
    
    
    
    
    
    140
    
    
    
    11Total
    
    $
    28,755
    
    
    $
    31,890
    
    
    $
    1,903
    
    
    $
    20,833
    
    
    $
    608
  F - 34




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7.
    
    PREMISES AND EQUIPMENT
 Premises and equipment consisted of the following:
 December 31,2010
    
    
    2009Land
    
    $
    2,628,000
    
    
    $
    2,377,000Premises
    
    
    15,394,000
    
    
    
    14,220,000Furniture, equipment and leasehold improvements
    
    
    9,810,000
    
    
    
    10,108,00027,832,000
    
    
    
    26,705,000Less accumulated depreciation
and amortization
    
    
    (13,401,000
    )
    
    
    (12,161,000
    )$
    14,431,000
    
    
    $
    14,544,000
 Depreciation and amortization included in occupancy and equipment expense totaled
$1,521,000, $1,756,000 and $1,769,000 for the years ended December 31, 2010, 2009 and 2008,
respectively.
 8.
    
    DEPOSITS
 Interest-bearing deposits consisted of the following:
 December 31,2010
    
    
    2009Interest-bearing demand deposits
    
    $
    100,000,000
    
    
    $
    106,083,000Money market
    
    
    42,279,000
    
    
    
    44,239,000Savings
    
    
    53,150,000
    
    
    
    48,304,000Time, $100,000 or more
    
    
    52,104,000
    
    
    
    55,003,000Other time
    
    
    65,552,000
    
    
    
    67,668,000$
    313,085,000
    
    
    $
    321,297,000
  F - 35




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8.
    
    DEPOSITS(Continued)At December 31, 2010, the scheduled maturities of time deposits were as follows:
 Year EndingDecember 31,2011
    
    $
    101,785,0002012
    
    
    12,885,0002013
    
    
    1,431,0002014
    
    
    1,106,0002015
    
    
    449,000$
    117,656,000
 At December 31, 2010, the contractual maturities of time deposits with a denomination of
$100,000 and over were as follows: $14,558,000 in 3 months or less, $15,938,000 over 3
months through 6 months, $15,937,000 over 6 months through 12 months, and $5,671,000 over 12
months.
 Deposit overdrafts reclassified as loan balances were $314,000 and $328,000 at December 31,
2010 and 2009, respectively.
 9.
    
    BORROWING ARRANGEMENTS
 The Company is a member of the FHLB and can borrow up to $91,408,000 from the FHLB secured
by commercial and residential mortgage loans with carrying values totaling $150,217,000. The
Company is required to hold FHLB stock as a condition of membership. At December 31, 2010,
the Company held $2,188,000 of FHLB stock which is recorded as a component of other assets.
At this level of stock holdings the Company can borrow up to $46,561,000. To borrow the
$91,408,000 in available credit the Company would need to purchase $2,108,000 in additional
FHLB stock. In addition, the Company has the ability to secure advances through the Federal
Reserve Bank of San Francisco discount window. These advances also must be collateralized.
 Short-term borrowings at December 31, 2009 consisted of a $20,000,000 FHLB advance at 0.47%
which matured and was repaid on January 19, 2010. Long-term borrowings at December 31, 2009
consisted of two $10,000,000 FHLB advances. The first advance was scheduled to mature on
November 23, 2011 with an interest rate of 1.00%. The second advance was scheduled to
mature on November 23, 2012 and had an interest rate of 1.60%. During July 2010 the Company
prepaid the two long term advances incurring a $226,000 prepayment penalty. There were no
borrowings outstanding at December 31, 2010.
  F - 36




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10.
    
    JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
 Plumas Statutory Trust I and II are Connecticut business trusts formed by the Company with
capital of $275,000 and $152,000, respectively, for the sole purpose of issuing trust
preferred securities fully and unconditionally guaranteed by the Company. Under applicable
regulatory guidance, the amount of trust preferred securities that is eligible as Tier 1
capital is limited to twenty-five percent of the Companys Tier 1 capital, as defined, on a
pro forma basis. At December 31, 2010, all of the trust preferred securities that have been
issued qualify as Tier 1 capital.
 During 2002, Plumas Statutory Trust I issued 6,000 Floating Rate Capital Trust Pass-Through
Securities (Trust Preferred Securities), with a liquidation value of $1,000 per security,
for gross proceeds of $6,000,000. During 2005, Plumas Statutory Trust II issued 4,000 Trust
Preferred Securities with a liquidation value of $1,000 per security, for gross proceeds of
$4,000,000. The entire proceeds were invested by Trust I in the amount of $6,186,000 and
Trust II in the amount of $4,124,000 in Floating Rate Junior Subordinated Deferrable
Interest Debentures (the Subordinated Debentures) issued by the Company, with identical
maturity, repricing and payment terms as the Trust Preferred Securities. The Subordinated
Debentures represent the sole assets of Trusts I and II.
 Trust Is Subordinated Debentures mature on September 26, 2032, bear a current interest rate
of 3.70% (based on 3-month LIBOR plus 3.40%), with repricing and payments due quarterly.
Trust IIs Subordinated Debentures mature on September 28, 2035, bear a current interest
rate of 1.78% (based on 3-month LIBOR plus 1.48%), with repricing and payments due
quarterly. The Subordinated Debentures are redeemable by the Company, subject to receipt by
the Company of prior approval from the Federal Reserve Board of Governors, on any quarterly
anniversary date on or after the 5-year anniversary date of the issuance. The redemption
price is par plus accrued and unpaid interest, except in the case of redemption under a
special event which is defined in the debenture. The Trust Preferred Securities are subject
to mandatory redemption to the extent of any early redemption of the Subordinated Debentures
and upon maturity of the Subordinated Debentures on September 26, 2032 for Trust I and
September 28, 2035 for Trust II.
 Holders of the Trust Preferred Securities are entitled to a cumulative cash distribution on
the liquidation amount of $1,000 per security. The interest rate of the Trust Preferred
Securities issued by Trust I adjust on each quarterly anniversary date to equal the 3-month
LIBOR plus 3.40%. The Trust Preferred Securities issued by Trust II adjust on each quarterly
anniversary date to equal the 3-month LIBOR plus 1.48%. Both Trusts I and II have the
option to defer payment of the distributions for a period of up to five years, as long as
the Company is not in default on the payment of interest on the Subordinated Debentures.
The Trust Preferred Securities were sold and issued in private transactions pursuant to an
exemption from registration under the Securities Act of 1933, as amended. The Company has
guaranteed, on a subordinated basis, distributions and other payments due on the Trust
Preferred Securities.
  F - 37




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10.
    
    JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES (Continued)
 Since the second quarter of 2010, the Company has deferred regularly scheduled quarterly
interest payments on its outstanding junior subordinated debentures relating to its two
trust preferred securities. While the Company has accrued for this obligation, it is
currently deferring the interest payments on the junior subordinated debentures as permitted
by the agreements. As of December 31, 2010, the amount of the arrearage on the payments on
the subordinated debt associated with the trust preferred securities is $233,000.
 Interest expense recognized by the Company for the years ended December 31, 2010, 2009 and
2008 related to the subordinated debentures was $312,000, $371,000 and $623,000,
respectively.
 11.
    
    COMMITMENTS AND CONTINGENCIES
 Leases
 The Company has commitments for leasing premises under the terms of noncancelable operating
leases expiring from 2010 to 2015. Future minimum lease payments are as follows:
 Year EndingDecember 31,2011
    
    $
    133,0002012
    
    
    128,0002013
    
    
    60,0002014
    
    
    37,0002015
    
    
    9,000$
    367,000
 Rental expense included in occupancy and equipment expense totaled $20,000, $317,000 and
$347,000 for the years ended December 31, 2010, 2009 and 2008, respectively.
 Financial Instruments With Off-Balance-Sheet Risk
 The Company is a party to financial instruments with off-balance-sheet risk in the normal
course of business in order to meet the financing needs of its customers. These financial
instruments include commitments to extend credit and letters of credit. These instruments
involve, to varying degrees, elements of credit and interest rate risk in excess of the
amount recognized on the consolidated balance sheet.
 The Companys exposure to credit loss in the event of nonperformance by the other party for
commitments to extend credit and letters of credit is represented by the contractual amount
of those instruments. The Company uses the same credit policies in making commitments and
letters of credit as it does for loans included on the consolidated balance sheet.
  F - 38




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11.
    
    COMMITMENTS AND CONTINGENCIES(Continued)
  December 31,2010
    
    
    2009Commitments to extend credit
    
    $
    71,605,000
    
    
    $
    67,258,000Letters of credit
    
    $
    164,000
    
    
    $
    304,000
 Commitments to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. Since some
of the commitments are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Company evaluates each
customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on managements credit
evaluation of the borrower. Collateral held varies, but may include accounts receivable,
crops, inventory, equipment, income-producing commercial properties, farm land and
residential properties.
 Letters of credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loans to customers. The fair
value of the liability related to these letters of credit, which represents the fees
received for issuing the guarantees, was not significant at December 31, 2010 and 2009. The
Company recognizes these fees as revenues over the term of the commitment or when the
commitment is used.
 At December 31, 2010, consumer loan commitments represent approximately 14% of total
commitments and are generally unsecured. Commercial and agricultural loan commitments
represent approximately 36% of total commitments and are generally secured by various assets
of the borrower. Real estate loan commitments, including consumer home equity lines of
credit, represent the remaining 50% of total commitments and are generally secured by
property with a loan-to-value ratio not to exceed 80%. In addition, the majority of the
Companys commitments have variable interest rates.
 Concentrations of Credit Risk
 The Company grants real estate mortgage, real estate construction, commercial, agricultural
and consumer loans to customers throughout Plumas, Nevada, Placer, Lassen, Sierra, Shasta
and Modoc counties in California and Washoe county in Northern Nevada.
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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11.
    
    COMMITMENTS AND CONTINGENCIES(Continued)
 Concentrations of Credit Risk (Continued)
 Although the Company has a diversified loan portfolio, a substantial portion of its
portfolio is secured by commercial and residential real estate. A continued substantial
decline in the economy in general, or a continued decline in real estate values in the
Companys primary market areas in particular, could have an adverse impact on the
collectibility of these loans. However, personal and business income represent the primary
source of repayment for a majority of these loans.
 Contingencies
 The Company is subject to legal proceedings and claims which arise in the ordinary course of
business. In the opinion of management, the amount of ultimate liability with respect to
such actions will not materially affect the financial position or results of operations of
the Company.
 12.
    
    SHAREHOLDERS EQUITY
 Dividend Restrictions
 The Companys ability to pay cash dividends is dependent on dividends paid to it by the Bank
and limited by California corporation law. Under California law, the holders of common
stock of the Company are entitled to receive dividends when and as declared by the Board of
Directors, out of funds legally available, subject to certain restrictions. The California
general corporation law prohibits the Company from paying dividends on its common stock
unless: (i) its retained earnings, immediately prior to the dividend payment, equals or
exceeds the amount of the dividend or (ii) immediately after giving effect to the dividend,
the sum of the Companys assets (exclusive of goodwill and deferred charges) would be at
least equal to 125% of its liabilities (not including deferred taxes, deferred income and
other deferred liabilities) and the current assets of the Company would be at least equal to
its current liabilities, or, if the average of its earnings before taxes on income and
before interest expense for the two preceding fiscal years was less than the average of its
interest expense for the two preceding fiscal years, at least equal to 125% of its current
liabilities.
 Dividends from the Bank to the Company are restricted under California law to the lesser of
the Banks retained earnings or the Banks net income for the latest three fiscal years,
less dividends previously declared during that period, or, with the approval of the
Department of Financial Institutions (DFI), to the greater of the retained earnings of the
Bank, the net income of the Bank for its last fiscal year, or the net income of the Bank for
its current fiscal year. As of December 31, 2010, the bank was restricted, without prior
approval from the DFI, from paying cash dividends to the Company. In addition the Companys
ability to pay dividends is subject to certain covenants contained in the indentures
relating to the Trust Preferred Securities issued by the business trusts (see Note 10 for
additional information related to the Trust Preferred Securities).
 As describe below, dividends on common stock are also limited related to the Companys
participation in the Capital Purchase Program. Additionally, Plumas Bancorp was required by
the Federal Reserve Bank of San Francisco (FRB) to obtain the FRBs prior written consent
before paying any dividends on its common stock or its Series A Preferred Stock, or making
any payments on its trust preferred securities.
  F - 40




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    SHAREHOLDERS EQUITY(Continued)
 Preferred Stock
 On January 30, 2009 the Company entered into a Letter Agreement (the Purchase Agreement)
with the United States Department of the Treasury (Treasury), pursuant to which the
Company issued and sold (i) 11,949 shares of the Companys Fixed Rate Cumulative Perpetual
Preferred Stock, Series A (the Series A Preferred Stock) and (ii) a warrant (the
Warrant) to purchase 237,712 shares of the Companys common stock, no par value (the
Common Stock), for an aggregate purchase price of $11,949,000 in cash.
 The Warrant has a 10-year term and is exercisable, with an exercise price, subject to
antidilution adjustments, equal to $7.54 per share of the Common Stock. Treasury has agreed
not to exercise voting power with respect to any shares of Common Stock issued upon exercise
of the Warrant.
 The Company allocated the proceeds received on January 30, 2009 between the Series A
Preferred Stock and the Warrant based on the estimated relative fair value of each. The
fair value of the Warrant was estimated based on a Black-Scholes-Merton model and totaled
$320,000. The discount recorded on the Series A Preferred Stock was based on a discount
rate of 12% and will be amortized by the level-yield method over 5 years. Discount
accretion for the year ended December 31, 2009 totaled $79,000.
 The Series A Preferred Stock qualifies as Tier 1 capital and will pay cumulative dividends
quarterly at a rate of 5% per annum for the first five years, and 9% per annum thereafter.
The Company may redeem the Series A Preferred Stock at its liquidation preference ($1,000
per share) plus accrued and unpaid dividends under the American Recovery and Reinvestment
Act of 2009, subject to the Treasurys consultation with the Companys appropriate federal
regulator.
 With respect to dividends on the Companys common stock, Treasurys consent shall be
required for any increase in common dividends per share until the third anniversary of the
date of its investment unless prior to such third anniversary the Series A Preferred Stock
is redeemed in whole or the Treasury has transferred all of the Senior Preferred Series A
Preferred Stock to third parties. Furthermore, with respect to dividends on certain other
series of preferred stock, restrictions from Treasury may apply. The Company does not have
any outstanding preferred stock other than the Series A Preferred Stock discussed above.
 During the second quarter of 2010, Plumas Bancorp, as required by the FRB, suspended
quarterly cash dividend payments on its Series A Preferred Stock. While Plumas Bancorp has
accrued for this obligation, it is currently in arrears in the amount of $449,000 with the
dividend payments on the Series A Preferred Stock as of December 31, 2010.
  F - 41




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    SHAREHOLDERS EQUITY(Continued)
 Earnings Per Share
 Basic earnings per share is computed by dividing income (loss) available to common
shareholders by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock, such as stock options, result in the issuance of
common stock which shares in the earnings of the Company. The treasury stock method has
been applied to determine the dilutive effect of stock options in computing diluted earnings
per share.
 For the Year Ended December 31,(In thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2008Net Income (loss):Net income (loss)
    
    $
    971
    
    
    $
    (9,146
    )
    
    $
    304Dividends accrued and discount accreted on
preferred shares
    
    
    (684
    )
    
    
    (628
    )
    
    
    Net income (loss) available to common shareholders
    
    $
    287
    
    
    $
    (9,774
    )
    
    $
    304Earnings (loss) Per Share:Basic earnings (loss) per share
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06Diluted earnings (loss) per share
    
    $
    0.06
    
    
    $
    (2.05
    )
    
    $
    0.06Weighted Average Number of Shares Outstanding:Basic shares
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,817Diluted shares
    
    
    4,776
    
    
    
    4,776
    
    
    
    4,835
 Included in diluted shares were dilutive stock options totaling 18,022 for the year
ended December 31, 2008.
 Shares of common stock issuable under stock options for which the exercise prices were
greater than the average market prices were not included in the computation of diluted
earnings per share due to their antidilutive effect. When a net loss occurs, no difference
in earnings per share is calculated because the conversion of potential common stock is
anti-dilutive. Stock options not included in the computation of diluted earnings per share,
due to shares not being in the-money and having an antidilutive effect, were 312,000 and
394,000 for the years ended December 31, 2010 and 2008, respectively.
  F - 42




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    SHAREHOLDERS EQUITY(Continued)
 Stock Options
 In 2001 and 1991, the Company established Stock Option Plans for which 873,185 shares of
common stock remain reserved for issuance to employees and directors and 561,155 shares are
available for future grants under incentive and nonstatutory agreements as of December 31,
2010. The Plans require that the option price may not be less than the fair market value of
the stock at the date the option is granted, and that the stock must be paid in full at the
time the option is exercised. Payment in full for the option price must be made in cash or
with Company common stock previously acquired by the optionee and held by the optionee for a
period of at least six months. The Plans do not provide for the settlement of awards in cash
and new shares are issued upon option exercise. The options expire on dates determined by
the Board of Directors, but not later than ten years from the date of grant. Upon grant,
options vest ratably over a three to five year period. A summary of the combined activity
within the Plans follows:
 WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    ContractualShares
    
    
    Price
    
    
    Term
    
    
    Intrinsic ValueOptions outstanding at January 1, 2008
    
    
    395,772
    
    
    $
    13.37Options granted
    
    
    90,300
    
    
    
    12.40Options exercised
    
    
    (12,476
    )
    
    
    5.38Options cancelled
    
    
    (6,640
    )
    
    
    14.30Options outstanding at December 31, 2008
    
    
    466,956
    
    
    $
    13.38Options exercised
    
    
    (1,000
    )
    
    
    5.43Options cancelled
    
    
    (61,990
    )
    
    
    12.38Options outstanding at December 31, 2009
    
    
    403,966
    
    
    $
    13.56Options cancelled
    
    
    (91,936
    )
    
    
    14.05Options outstanding at December 31, 2010
    
    
    312,030
    
    
    $
    13.41
    
    
    
    3.7
    
    
    $
    Options exercisable at December 31, 2010
    
    
    255,437
    
    
    $
    13.24
    
    
    
    3.4
    
    
    $
    Expected to vest after December 31, 2010
    
    
    49,219
    
    
    $
    14.19
    
    
    
    4.8
    
    
    $
    
 As of December 31, 2010, there was $72,000 of total unrecognized compensation cost related
to non-vested share-based compensation arrangements granted under the 2001 Plan. That cost
is expected to be recognized over a weighted average period of 0.8 years.
 The total fair value of options vested was $210,000 for the year ended December 31, 2010.
The total intrinsic value of options at time of exercise was $1,000 and $56,000 for the
years ended December 31, 2009 and 2008, respectively.
 Cash received from option exercise for the years ended December 31, 2009 and 2008 was $5,000
and $68,000, respectively. There was no tax benefit realized for the tax deduction from
options exercised in 2009 or 2008.
  F - 43




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    SHAREHOLDERS EQUITY(Continued)
 Regulatory Capital
 The Company and the Bank are subject to certain regulatory capital requirements administered
by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance
Corporation (FDIC). Failure to meet these minimum capital requirements can initiate certain
mandatory and possibly additional discretionary, actions by regulators that, if undertaken,
could have a direct material effect on the Companys consolidated financial statements.
 Under capital adequacy guidelines, the Company and the Bank must meet specific capital
guidelines that involved quantitative measures of their assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices. These
quantitative measures are established by regulation and require that minimum amounts and
ratios of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average
assets be maintained. Capital amounts and classifications are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.
 The Bank is also subject to additional capital guidelines under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must maintain
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table on
the following page and cannot be subject to a written agreement, order or capital directive
issued by the FDIC. As a result of a regulatory examination in 2010, the Bank also became
subject to Tier 1 leverage ratio of 9% and will become subject to a 10% Tier 1 leverage
ratio and 13% total risk-based ratio under the Order described in Note 2. At December 31,
2010, the Tier 1 leverage ratio was 8.9% and the total risk-based capitol ratio was 14.0%.
  F - 44




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    SHAREHOLDERS EQUITY(Continued)
  December 31,2010
    
    
    2009Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioLeverage RatioPlumas Bancorp and Subsidiary
    
    $
    42,994,000
    
    
    
    8.9
    %
    
    $
    40,564,000
    
    
    
    7.9
    %Minimum regulatory requirement
    
    $
    19,361,000
    
    
    
    4.0
    %
    
    $
    20,652,000
    
    
    
    4.0
    %Plumas Bank
    
    $
    43,262,000
    
    
    
    8.9
    %
    
    $
    38,172,000
    
    
    
    7.4
    %Minimum requirement for Well-
Capitalized institution under the
prompt corrective action plan
    
    $
    24,190,000
    
    
    
    5.0
    %
    
    $
    25,848,000
    
    
    
    5.0
    %Minimum regulatory requirement
    
    $
    19,352,000
    
    
    
    4.0
    %
    
    $
    20,678,000
    
    
    
    4.0
    %Tier 1 Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    $
    42,994,000
    
    
    
    12.7
    %
    
    $
    40,564,000
    
    
    
    10.4
    %Minimum regulatory requirement
    
    $
    13,570,000
    
    
    
    4.0
    %
    
    $
    15,641,000
    
    
    
    4.0
    %Plumas Bank
    
    $
    43,262,000
    
    
    
    12.8
    %
    
    $
    38,172,000
    
    
    
    9.8
    %Minimum requirement for Well-
Capitalized institution under the
prompt corrective action plan
    
    $
    20,342,000
    
    
    
    6.0
    %
    
    $
    23,433,000
    
    
    
    6.0
    %Minimum regulatory requirement
    
    $
    13,561,000
    
    
    
    4.0
    %
    
    $
    15,622,000
    
    
    
    4.0
    %Total Risk-Based Capital RatioPlumas Bancorp and Subsidiary
    
    $
    47,274,000
    
    
    
    13.9
    %
    
    $
    45,512,000
    
    
    
    11.6
    %Minimum regulatory requirement
    
    $
    27,140,000
    
    
    
    8.0
    %
    
    $
    31,281,000
    
    
    
    8.0
    %Plumas Bank
    
    $
    47,539,000
    
    
    
    14.0
    %
    
    $
    43,113,000
    
    
    
    11.0
    %Minimum requirement for Well-
Capitalized institution under the
prompt corrective action plan
    
    $
    33,903,000
    
    
    
    10.0
    %
    
    $
    39,056,000
    
    
    
    10.0
    %Minimum regulatory requirement
    
    $
    27,123,000
    
    
    
    8.0
    %
    
    $
    31,244,000
    
    
    
    8.0
    %
  F - 45




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 13.
    
    OTHER EXPENSES
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Outside service fees
    
    $
    1,212,000
    
    
    $
    990,000
    
    
    $
    803,000FDIC Insurance
    
    
    1,009,000
    
    
    
    1,125,000
    
    
    
    258,000Professional fees
    
    
    587,000
    
    
    
    789,000
    
    
    
    688,000OREO expenses
    
    
    573,000
    
    
    
    370,000
    
    
    
    175,000Telephone and data communications
    
    
    338,000
    
    
    
    392,000
    
    
    
    400,000Loan collection expenses
    
    
    261,000
    
    
    
    399,000
    
    
    
    205,000Advertising and promotion
    
    
    252,000
    
    
    
    327,000
    
    
    
    448,000Business development
    
    
    250,000
    
    
    
    333,000
    
    
    
    467,000Armored car and courier
    
    
    239,000
    
    
    
    281,000
    
    
    
    289,000Director compensation and retirement
    
    
    233,000
    
    
    
    293,000
    
    
    
    323,000Insurance
    
    
    218,000
    
    
    
    142,000
    
    
    
    235,000Postage
    
    
    207,000
    
    
    
    207,000
    
    
    
    208,000Core deposit intangible amortization
    
    
    173,000
    
    
    
    173,000
    
    
    
    216,000Stationery and supplies
    
    
    145,000
    
    
    
    183,000
    
    
    
    236,000(Gain) loss on sale of other real estate
    
    
    (43,000
    )
    
    
    158,000Other operating expenses
    
    
    396,000
    
    
    
    579,000
    
    
    
    184,000$
    6,050,000
    
    
    $
    6,741,000
    
    
    $
    5,135,000
 14.
    
    INCOME TAXES
  Federal
    
    
    State
    
    
    Total2010Current
    
    
    
    
    
    $
    4,000
    
    
    $
    4,000Deferred
    
    $
    277,000
    
    
    
    108,000
    
    
    
    385,000Provision for income
taxes
    
    $
    277,000
    
    
    $
    112,000
    
    
    $
    389,000
 Federal
    
    
    State
    
    
    Total2009Current
    
    $
    (2,803,000
    )
    
    $
    (120,000
    )
    
    $
    (2,923,000
    )Deferred
    
    
    (2,122,000
    )
    
    
    (1,730,000
    )
    
    
    (3,852,000
    )Benefit from income
taxes
    
    $
    (4,925,000
    )
    
    $
    (1,850,000
    )
    
    $
    (6,775,000
    )
  F - 46




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14.
    
    INCOME TAXES(Continued)
 Federal
    
    
    State
    
    
    Total2008Current
    
    $
    788,000
    
    
    $
    459,000
    
    
    $
    1,247,000Deferred
    
    
    (1,002,000
    )
    
    
    (457,000
    )
    
    
    (1,459,000
    )(Benefit from) provision for
Income taxes
    
    $
    (214,000
    )
    
    $
    2,000
    
    
    $
    (212,000
    )
  December 31,2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    1,490,000
    
    
    $
    2,838,000Net operating loss carryovers
    
    
    2,418,000
    
    
    
    1,353,000Deferred compensation
    
    
    1,614,000
    
    
    
    1,588,000Core deposit premium
    
    
    255,000
    
    
    
    266,000OREO valuation allowance
    
    
    1,723,000
    
    
    
    2,066,000Other
    
    
    521,000
    
    
    
    427,000Total deferred tax assets
    
    
    8,021,000
    
    
    
    8,538,000Deferred tax liabilities:Prepaid costs
    
    
    (104,000
    )
    
    
    (95,000
    )Deferred loan costs
    
    
    (739,000
    )
    
    
    (782,000
    )Premises and equipment
    
    
    
    
    
    
    (135,000
    )Unrealized gain on available-for-sale
investment securities
    
    
    
    
    
    
    (437,000
    )Other
    
    
    (174,000
    )
    
    
    (173,000
    )Total deferred tax liabilities
    
    
    (1,017,000
    )
    
    
    (1,622,000
    )Net deferred tax assets
    
    $
    7,004,000
    
    
    $
    6,916,000
 Deferred tax assets and liabilities are recognized for the tax consequences of temporary
differences between the reported amount of assets and liabilities and their tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The determination of the amount of deferred income tax assets which
are more likely than not to be realized is primarily dependent on projections of future
earnings, which are subject to uncertainty and estimates that may change given economic
conditions and other factors. The realization of deferred income tax assets is assessed and
a valuation allowance is recorded if it is more likely than not that all or a portion of
the deferred tax asset will not be realized. More likely than not is defined as greater
than a 50% chance. All available evidence, both positive and negative is considered to
determine whether, based on the weight of that evidence, a valuation allowance is needed.
  F - 47




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 14.
    
    INCOME TAXES(Continued)
  
    
    The Companys 2009 net loss was largely attributable to losses on its
Construction and Land Development portfolio that represented approximately 80% of
net charge-offs during the year ended December 31, 2009. This portfolio has
significantly decreased during the last two years and the Company is not growing
the portfolio.
 
    
    The Companys 2009 net loss was also attributable to large write-downs in
Construction and Land Development real estate owned which represented the majority
of its provision for losses on other real estate during 2009. During 2010 other
real estate write-downs decreased by $4.4 million from $4.8 million during the year
ended December 31, 2009 to $356 thousand during 2010.
 
    
    The Company has a long history of earnings profitability.
 
    
    The Company was profitable in 2010 and is projecting future taxable and book
income will be generated by operations.
 
    
    The size of loan credits in the Companys pipeline of potential problem loans
has significantly decreased.
 
    
    The Company does not have a history of net operating losses or tax credits
expiring unused.
  
    
    The Company recorded a large net loss in 2009 and is in a cumulative loss
position for the current and preceding two years.
   2010
    
    
    2009
    
    
    2008Federal income tax, at statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State franchise tax, net of Federal tax effect
    
    
    5.5
    %
    
    
    7.0
    %
    
    
    1.7
    %Interest on obligations of states and political
subdivisions
    
    
    (4.4
    )%
    
    
    1.3
    %
    
    
    (256.3
    )%Net increase in cash surrender value of bank
owned life insurance
    
    
    (8.8
    )%
    
    
    0.8
    %
    
    
    (125.1
    )%Other
    
    
    2.3
    %
    
    
    (0.5
    )%
    
    
    114.7
    %Effective tax rate
    
    
    28.6
    %
    
    
    42.6
    %
    
    
    (231.0
    )%
  F - 48




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14.
    
    INCOME TAXES(Continued)
    15.
    
    RELATED PARTY TRANSACTIONS
  Balance, January 1, 2010
    
    $
    1,370,000Disbursements
    
    
    12,000Amounts repaid
    
    
    (367,000
    )Balance, December 31, 2010
    
    $
    1,015,000Undisbursed commitments to related
parties, December 31, 2010
    
    $
    194,000
 16.
    
    EMPLOYEE BENEFIT PLANS
 Profit Sharing Plan
  
    
    For the years ended December 31, 2009 and 2008 and the three months ended March
31, 2010 a contribution which matches the participants contribution, up to a
maximum of 3% of the employees compensation. No contribution was made for the nine
months ended December 31, 2010.
 
    
    An additional discretionary contribution. No discretionary contribution was made
for the years ended December 31, 2010, 2009 and 2008.
  F - 49




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16.
    
    EMPLOYEE BENEFIT PLANS(Continued)
 Profit Sharing Plan (Continued)
  Salary Continuation and Retirement Agreements
   17.
    
    COMPREHENSIVE INCOME (LOSS)
 Comprehensive income (loss) is reported in addition to net income for all periods presented.
Comprehensive income (loss) is a more inclusive financial reporting methodology that
includes disclosure of other comprehensive income (loss) that historically has not been
recognized in the calculation of net income. The unrealized gains and losses on the
Companys available-for-sale investment securities are included in other comprehensive
income (loss). Total comprehensive income (loss) and the components of accumulated other
comprehensive income (loss) are presented in the consolidated statement of changes in
shareholders equity.
  F - 50




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 17.
    
    COMPREHENSIVE INCOME (LOSS)(Continued)
  TaxBefore
    
    
    Benefit
    
    
    AfterTax
    
    
    (Expense)
    
    
    TaxFor the Year Ended December 31, 2010Total other comprehensive loss:Unrealized holding gains
    
    $
    12,000
    
    
    $
    (5,000
    )
    
    $
    7,000Reclassification adjustment for gains
included in net income
    
    
    (1,160,000
    )
    
    
    479,000
    
    
    
    (681,000
    )Total other comprehensive loss
    
    $
    (1,148,000
    )
    
    $
    474,000
    
    
    $
    (674,000
    )For the Year Ended December 31, 2009Total other comprehensive income:Unrealized gains on securities transferred
from held-to-maturity to available
for-sale
    
    $
    335,000
    
    
    $
    (138,000
    )
    
    $
    197,000Unrealized holding gains
    
    
    184,000
    
    
    
    (75,000
    )
    
    
    109,000Reclassification adjustment for gains
included in net loss
    
    
    (10,000
    )
    
    
    
    
    
    
    (10,000
    )Total other comprehensive income
    
    $
    509,000
    
    
    $
    (213,000
    )
    
    $
    296,000For the Year Ended December 31, 2008Total other comprehensive income:Unrealized holding gains
    
    $
    1,138,000
    
    
    $
    (470,000
    )
    
    $
    668,000Reclassification adjustment for
impairment loss included in
net income
    
    
    (415,000
    )
    
    
    171,000
    
    
    
    (244,000
    )Total other comprehensive income
    
    $
    723,000
    
    
    $
    (299,000
    )
    
    $
    424,000
 18.
    
    INTANGIBLE ASSETS
    F - 51




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 18.
    
    INTANGIBLE ASSETS(Continued)
  December 31, 2010
    
    
    December 31, 2009Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationCore Deposit Intangibles
    
    $
    1,709,000
    
    
    $
    1,234,000
    
    
    $
    1,709,000
    
    
    $
    1,061,000
  Year EndingDecember 31,2011
    
    $
    173,0002012
    
    
    173,0002013
    
    
    129,000$
    475,000
  F - 52




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 19.
    
    PARENT ONLY CONDENSED FINANCIAL STATEMENTS
 CONDENSED BALANCE SHEET
 December 31, 2010 and 2009
 2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    626,000
    
    
    $
    3,710,000Investment in bank subsidiary
    
    
    47,399,000
    
    
    
    44,734,000Other assets
    
    
    1,071,000
    
    
    
    452,000Total assets
    
    $
    49,096,000
    
    
    $
    48,896,000LIABILITIES AND SHAREHOLDERS EQUITYOther liabilities
    
    $
    798,000
    
    
    $
    355,000Junior subordinated deferrable interest debentures
    
    
    10,310,000
    
    
    
    10,310,000Total liabilities
    
    
    11,108,000
    
    
    
    10,665,000Shareholders equity:Preferred stock
    
    
    11,682,000
    
    
    
    11,595,000Common stock
    
    
    6,027,000
    
    
    
    5,970,000Retained earnings
    
    
    20,331,000
    
    
    
    20,044,000Accumulated other comprehensive (loss) income
    
    
    (52,000
    )
    
    
    622,000Total shareholders equity
    
    
    37,988,000
    
    
    
    38,231,000Total liabilities and shareholders equity
    
    $
    49,096,000
    
    
    $
    48,896,000
 CONDENSED STATEMENT OF OPERATIONS
 For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Income:Dividends declared by bank subsidiary
    
    $
    
    
    
    $
    
    
    
    $
    3,000,000Earnings from investment in Plumas
Statutory Trusts I and II
    
    
    9,000
    
    
    
    11,000
    
    
    
    19,000Total income
    
    
    9,000
    
    
    
    11,000
    
    
    
    3,019,000Expenses:Interest on junior subordinated
deferrable interest debentures
    
    
    312,000
    
    
    
    371,000
    
    
    
    623,000Other expenses
    
    
    242,000
    
    
    
    808,000
    
    
    
    730,000Total expenses
    
    
    554,000
    
    
    
    1,179,000
    
    
    
    1,353,000Income (loss) before equity in
undistributed income of subsidiary
    
    
    (545,000
    )
    
    
    (1,168,000
    )
    
    
    1,666,000Equity in undistributed income (loss) of
subsidiary
    
    
    1,292,000
    
    
    
    (8,452,000
    )
    
    
    (1,911,000
    )Income (loss) before income taxes
    
    
    747,000
    
    
    
    (9,620,000
    )
    
    
    (245,000
    )Income tax benefit
    
    
    224,000
    
    
    
    474,000
    
    
    
    549,000Net income (loss)
    
    $
    971,000
    
    
    $
    (9,146,000
    )
    
    $
    304,000
  F - 53




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##### Table of Contents



PLUMAS BANCORP AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 19.
    
    PARENT ONLY CONDENSED FINANCIAL STATEMENTS(Continued)
 CONDENSED STATEMENT OF CASH FLOWS
 For the Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    971,000
    
    
    $
    (9,146,000
    )
    
    $
    304,000Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating activities:Undistributed (income) loss of
subsidiary
    
    
    (1,292,000
    )
    
    
    8,452,000
    
    
    
    1,911,000Stock-based compensation expense
    
    
    10,000
    
    
    
    47,000
    
    
    
    58,000(Increase) decrease in other assets
    
    
    (619,000
    )
    
    
    124,000
    
    
    
    (35,000
    )Increase in other liabilities
    
    
    (4,000
    )
    
    
    115,000
    
    
    
    28,000Net cash (used in) provided by
operating activities
    
    
    (934,000
    )
    
    
    (408,000
    )
    
    
    2,266,000Cash flows from investing activities:Investment in bank subsidiary
    
    
    (2,000,000
    )
    
    
    (8,000,000
    )Net cash used in investing activities
    
    
    (2,000,000
    )
    
    
    (8,000,000
    )
    
    
    Cash flows from financing activities:Payment of cash dividends on common stock
    
    
    
    
    
    
    
    
    
    
    (1,153,000
    )Payment of cash dividends on preferred stock
    
    
    (150,000
    )
    
    
    (473,000
    )Issuance of preferred stock, net of discount
    
    
    
    
    
    
    11,517,000Issuance of common stock warrant
    
    
    
    
    
    
    407,000Proceeds from the exercise of stock
options
    
    
    
    
    
    
    5,000
    
    
    
    68,000Repurchase and retirement of common stock
    
    
    
    
    
    
    
    
    
    
    (1,217,000
    )Net cash (used in) provided by
financing activities
    
    
    (150,000
    )
    
    
    11,456,000
    
    
    
    (2,302,000
    )(Decrease) increase in cash and cash
equivalents
    
    
    (3,084,000
    )
    
    
    3,048,000
    
    
    
    (36,000
    )Cash and cash equivalents at beginning
of year
    
    
    3,710,000
    
    
    
    662,000
    
    
    
    698,000Cash and cash equivalents at end of year
    
    $
    626,000
    
    
    $
    3,710,000
    
    
    $
    662,000Non-cash investing activities:Net change in unrealized gain/loss on
investment securities available-for-sale
    
    $
    (674,000
    )
    
    $
    305,000
    
    
    $
    424,000
  F - 54




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
  REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    /s/ Andrew J. Ryback

Andrew J. RybackInterim President and Chief Executive Officer/s/ Richard L. Belstock

Richard L. BelstockSenior Vice President and Interim Chief Financial Officer
   53




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##### Table of Contents



ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
   54




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) Exhibits
  3.1
    
    
    Articles of Incorporation as amended of Registrant included as exhibit 3.1 to the Registrants
Form S-4, File No. 333-84534, which is incorporated by reference herein.3.2
    
    
    Bylaws of Registrant as amended on March 16, 2011.3.3
    
    
    Amendment of the Articles of Incorporation of Registrant dated November 1, 2002, is included
as exhibit 3.3 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein.3.4
    
    
    Amendment of the Articles of Incorporation of Registrant dated August 17, 2005, is included as
exhibit 3.4 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein.4
    
    
    Specimen form of certificate for Plumas Bancorp included as exhibit 4 to the Registrants Form
S-4, File No. 333-84534, which is incorporated by reference herein.4.1
    
    
    Certificate of Determination of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, is
included as exhibit 4.1 to Registrants 8-K filed on January 30, 2009, which is incorporated
by this reference herein.10.1
    
    
    Executive Salary Continuation Agreement of Andrew J. Ryback dated December 17, 2008, is
included as exhibit 10.1 to the Registrants 10-K for December 31, 2008, which is incorporated
by this reference herein.10.2
    
    
    Split Dollar Agreement of Andrew J. Ryback dated August 23, 2005, is included as Exhibit 10.2
to the Registrants 8-K filed on October 17, 2005, which is incorporated by this reference
herein.10.8
    
    
    Director Retirement Agreement of John Flournoy dated March 21, 2007, is included as Exhibit
10.8 to Registrants 10-Q for March 31, 2007, which is incorporated by this reference herein.10.11
    
    
    First Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
September 15, 2004, is included as Exhibit 10.11 to the Registrants 8-K filed on September 17,
2004, which is incorporated by this reference herein.
  55




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##### Table of Contents



10.18
    
    
    Amended and Restated Director Retirement Agreement of Daniel E. West dated May 10, 2000, is
included as Exhibit 10.18 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein.10.19
    
    
    Consulting Agreement of Daniel E. West dated May 10, 2000, is included as Exhibit 10.19 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.20
    
    
    Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is included as Exhibit
10.20 to the Registrants 8-K filed on September 17, 2004, which is incorporated by this
reference herein.10.21
    
    
    Amended and Restated Director Retirement Agreement of Alvin G. Blickenstaff dated April 19,
2000, is included as Exhibit 10.21 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.22
    
    
    Consulting Agreement of Alvin G. Blickenstaff dated May 8, 2000, is included as Exhibit 10.22
to the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.24
    
    
    Amended and Restated Director Retirement Agreement of Gerald W. Fletcher dated May 10, 2000,
is included as Exhibit 10.24 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.25
    
    
    Consulting Agreement of Gerald W. Fletcher dated May 10, 2000, is included as Exhibit 10.25 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.27
    
    
    Amended and Restated Director Retirement Agreement of Arthur C. Grohs dated May 9, 2000, is
included as Exhibit 10.27 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein.10.28
    
    
    Consulting Agreement of Arthur C. Grohs dated May 9, 2000, is included as Exhibit 10.28 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.33
    
    
    Amended and Restated Director Retirement Agreement of Terrance J. Reeson dated April 19, 2000,
is included as Exhibit 10.33 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein.10.34
    
    
    Consulting Agreement of Terrance J. Reeson dated May 10, 2000, is included as Exhibit 10.34 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein.10.35
    
    
    Letter Agreement, dated January 30, 2009 by and between Plumas Bancorp, Inc. and the United
States Department of the Treasury and Securities Purchase Agreement  Standard Terms attached
thereto, is included as exhibit 10.1 to Registrants 8-K filed on January 30, 2009, which is
incorporated by this reference herein.10.36
    
    
    Form of Senior Executive Officer letter agreement, is included as exhibit 10.2 to Registrants
8-K filed on January 30, 2009, which is incorporated by this reference herein.10.37
    
    
    Deferred Fee Agreement of Alvin Blickenstaff is included as Exhibit 10.37 to the Registrants
10-Q for March 31, 2009, which is incorporated by this reference herein.10.40
    
    
    2001 Stock Option Plan as amended is included as exhibit 99.1 of the Form S-8 filed July 23,
2002, File No. 333-96957, which is incorporated by this reference herein.10.41
    
    
    Form of Indemnification Agreement (Plumas Bancorp) is included as Exhibit 10.41 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein.
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##### Table of Contents



10.42
    
    
    Form of Indemnification Agreement (Plumas Bank) is included as Exhibit 10.42 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein.10.43
    
    
    Plumas Bank 401(k) Profit Sharing Plan as amended is included as exhibit 99.1 of the Form S-8
filed February 14, 2003, File No. 333-103229, which is incorporated by this reference herein.10.44
    
    
    Executive Salary Continuation Agreement of Robert T. Herr dated June 4, 2002, is included as
Exhibit 10.44 to the Registrants 10-Q for March 31, 2003, which is incorporated by this
reference herein.10.46
    
    
    1991 Stock Option Plan as amended is included as Exhibit 10.46 to the Registrants 10-Q for
September 30, 2004, which is incorporated by this reference herein.10.47
    
    
    Specimen form of Incentive Stock Option Agreement under the 1991 Stock Option Plan is included
as Exhibit 10.47 to the Registrants 10-Q for September 30, 2004, which is incorporated by
this reference herein.10.48
    
    
    Specimen form of Non-Qualified Stock Option Agreement under the 1991 Stock Option Plan is
included as Exhibit 10.48 to the Registrants 10-Q for September 30, 2004, which is
incorporated by this reference herein.10.49
    
    
    Amended and Restated Plumas Bancorp Stock Option Plan is included as Exhibit 10.49 to the
Registrants 10-Q for September 30, 2006, which is incorporated by this reference herein.10.50
    
    
    Executive Salary Continuation Agreement of Rose Dembosz, is included as exhibit 10.50 to the
Registrants 10-K for December 31, 2008, which is incorporated by this reference herein.10.51
    
    
    First Amendment to Split Dollar Agreement of Andrew J. Ryback, is included as exhibit 10.51 to
the Registrants 10-K for December 31, 2008, which is incorporated by this reference herein.10.56
    
    
    Second Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
June 4, 2002 and Amended September 15, 2004, is included as exhibit 10.56 to the Registrants
10-K for December 31, 2008, which is incorporated by this reference herein.10.57
    
    
    First Amendment to Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is
included as exhibit 10.57 to the Registrants 10-K for December 31, 2008, which is
incorporated by this reference herein.10.58
    
    
    Executive Salary Continuation Agreement of Robert T. Herr dated December 17, 2008, is included
as exhibit 10.58 to the Registrants 10-K for December 31, 2008, which is incorporated by this
reference herein.10.64
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Alvin Blickenstaff adopted on September 19, 2007, is included as Exhibit 10.64 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.65
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Arthur C. Grohs adopted on September 19, 2007, is included as Exhibit 10.65 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.67
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Terrance J. Reeson adopted on September 19, 2007, is included as Exhibit 10.67 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein.10.69
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Daniel E. West adopted on September 19, 2007, is included as Exhibit 10.69 to the Registrants
8-K filed on September 25, 2007, which is incorporated by this reference herein.
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##### Table of Contents



10.70
    
    
    First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Gerald W. Fletcher adopted on October 9, 2007, is included as Exhibit 10.70 to the
Registrants 10-Q for September 30, 2007, which is incorporated by this reference herein.10.71
    
    
    Consent Order issued by the FDIC and CDFI to Plumas Bank on March 18, 2011, is included as
Exhibit 10.1 of the Registrants 8-K filed on March 21, 2011, which is incorporated by this
reference herein.10.72
    
    
    Stipulation and Consent to the Issuance of Consent Order among Plumas Bank and the FDIC
entered into on March 16, 2011, is included as Exhibit 10.2 of the Registrants 8-K filed on
March 21, 2011, which is incorporated by this reference herein.11
    
    
    Computation of per share earnings appears in the attached 10-K under Item 8 Financial
Statements Plumas Bancorp and Subsidiary Notes to Consolidated Financial Statements as
Footnote 12  Shareholders Equity.21.01
    
    
    Plumas Bank  California.21.02
    
    
    Plumas Statutory Trust I  Connecticut.21.03
    
    
    Plumas Statutory Trust II  Connecticut.23
    
    
    Independent Registered Public Accountants Consent letter dated March 23, 201131.1
    
    
    Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated March 23, 201131.2
    
    
    Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated March 23, 201132.1
    
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 23, 2011.32.2
    
    
    Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 23, 2011.99.1
    
    
    Certification of Chief Executive Officer pursuant to Section 111(b)(4) of the Emergency
Economic Stabilization Act of 2008 dated March 23, 2011.99.2
    
    
    Certification of Chief Financial Officer pursuant to Section 111(b)(4) of the Emergency
Economic Stabilization Act of 2008 dated March 23, 2011.
  58




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##### Table of Contents



SIGNATURES
  PLUMAS BANCORP
  /s/ ANDREW J. RYBACKAndrew J. RybackInterim President and Chief Executive Officer/s/ RICHARD L. BELSTOCKRichard L. BelstockSenior Vice President and Interim Chief Financial Officer  59




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##### Table of Contents



/s/ DANIEL E. WEST

Daniel E. West, Director and Chairman of the Board
    
    Dated: March 23, 2011/s/ TERRANCE J. REESON

Terrance J. Reeson, Director and Vice Chairman of
the Board
    
    Dated: March 23, 2011/s/ ALVIN G. BLICKENSTAFF

Alvin G. Blickenstaff, Director
    
    Dated: March 23, 2011/s/ W. E. ELLIOTT

William E. Elliott, Director
    
    Dated: March 23, 2011/s/ GERALD W. FLETCHER

Gerald W. Fletcher, Director
    
    Dated: March 23, 2011/s/ JOHN FLOURNOY

John Flournoy, Director
    
    Dated: March 23, 2011/s/ ARTHUR C. GROHS

Arthur C. Grohs, Director
    
    Dated: March 23, 2011/s/ ROBERT J. MCCLINTOCK

Robert J. McClintock, Director
    
    Dated: March 23, 2011
  60